September 11, 2008
OCR drop will help manufacturing but system still needs to be fixed
The Engineering, Printing and Manufacturing Union welcomes today’s reduction in the official cash rate as a step toward easing pressure on New Zealand’s exporting manufacturers.
The call follows Reserve Bank governor Allan Bollard’s announcement the rate will be reduced by 0.5%, which follows on the heels of the last cut of 0.25%.
EPMU national secretary Andrew Little says the reduction will mean a lower New Zealand dollar and a better environment for exporting.
“We’ve seen a whole series of redundancies in manufacturing over the last few years and in most cases employers have cited the high dollar as a factor in their decision to downsize or close.
“The simple fact is that high interest rates mean a high dollar and that often means our export manufacturing being priced out of the global market.
“Over the last five years we have seen manufacturers punished by OCR increases that were responding to pressures in completely different sectors such as housing and debt.
“While it is good to see the rate coming down the fact is that it has been too high for too long because the single-lever monetarist model is a dreadful way to regulate inflation.
“We would hope that now the OCR is easing off the government takes the opportunity to review the Reserve Bank Act with an eye to providing a more sensible model of inflation control.”
The EPMU represents fifty thousand New Zealand workers across eleven industries and most exporting sectors.