Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 


Reserve Bank shouldn't raise interest rate

Reserve Bank shouldn't raise interest rate


"It is important that interest rates are kept at no more than their current levels", says CTU Economist Bill Rosenberg. "Unemployment is still high despite signs of growth in the economy. Wages need to rise in real terms after years of stagnation. Businesses need to invest in areas other than property to create jobs."

"There is strong pressure from the banks to increase interest rates, but that should be resisted. Instead the Reserve Bank should be looking at more active use of macroprudential policies to address interest rates, rather than focus them only on financial stability as they do now. For example, depending on the problems being faced they should consider more strongly focused sectoral capital requirements for banks, and make more active use of the core funding ratio as a means to control the availability of credit, particularly that funded from overseas."

Interest rates rising faster than the rest of the world will raise the exchange rate, making it even more difficult for exporters. There is a real risk that the faster interest rates rise, the more that growth in the economy, wages and employment are choked. It would also make it more tempting for banks to increase their borrowing from overseas to fund credit growth here, worsening the situation as it did during the 2000s.

Interest rate rises will also make house ownership less affordable by adding to the cost of living for people with mortgages and other borrowing. The Government needs to take more urgent action to stabilise house prices.

New Zealand is not doing well on unemployment: at 6.2 percent, it is 13th in the OECD despite New Zealand having the 5th highest growth rate. Treasury forecasts suggest it will fall only slowly from 150,000 out of work now, still being at 130,000 in 2017. There needs to be a much stronger focus on employment growth.

The Reserve Bank will make an announcement tomorrow. It should take a broad view of its responsibilities towards housing affordability, exports, employment, wages and a balanced economy. If the Government is not doing these things, it needs to take up some of the slack.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Interim Report: Waitangi Tribunal On Ture Whenua Legislation

Labour on Proposed changes to Maori land rules: “To have Treaty Negotiations Minister Chris Finlayson dismiss findings as ‘bizarre’ is totally disingenuous and disrespectful. What’s bizarre is Maori Development Minister Te Ururoa Flavell stubbornly pushing through this Bill before the Waitangi Tribunal has even completed its report..." More>>

ALSO:

Spy Update: Appointment Of GCSB Acting Director

GCSB Chief Legal Advisor Lisa Fong will become the Acting Director of the Government Communications Security Bureau (GCSB) from 15 February 2016, Minister Responsible for the GCSB Christopher Finlayson announced today. More>>

Protests Close Roads: TPP Signed In Auckland

“TPP was signed by Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Viet Nam.” More>>

ALSO:

Emails Behind 'Diplomatic Immunity' Case: Whitehead Report Released

“As previously indicated the conclusions reached by Mr Whitehead’s investigation are not unexpected but they are very disappointing,” Mr Mccully says. “At the heart of the matter is a single email, along with procedural shortcomings, which gave Malaysian officials the impression it would be acceptable for Mr Rizalman to return to Malaysia." More>>

ALSO:

Gordon Campbell: On The Treaty/TPP Overlap, And Iowa

The fears about the ISDS provisions in the Trans Pacific Partnership deal are well-founded. The reality is that there is a sharp uptick in the occurrence of ISDS litigation in developed countries, and even the right wing likes of The Economist have been souring on the process for some time. More>>

ALSO:

Christchurch Red Zone Offers: Fresh High Court Proceedings

Grant Cameron, Solicitor for the Quake Outcasts said “the action seeks judicial review of the Crown’s recent decision to make a fresh offer to purchase properties from uninsured property owners in red zones. More>>

ALSO:

PM's Post-Cabinet Press Conference: Waitangi And TPP

Prime Minister John Key on Tuesday said his office has received an invitation for him to visit the Lower Marae on Waitangi Day, but was waiting for a meeting of the Te Tii Marae Trustees. More>>

ALSO:

Flagged: 'Wrong Colour' Bridge Flag To Change

NZ First: Only 13 days after National trumpeted its legally questionable flag on Auckland Harbour Bridge, it is now coming down because it is the wrong colour... “Mr Key’s latest flag fiasco is another waste of taxpayers' money. Given it is coming down, down is exactly the location where it should remain. More>>

ALSO:

School's In: Children Head Back To School

“Across the whole of this year we expect 61,820 five year olds will begin their primary schooling for the first time,” says the Ministry of Education head of sector enablement and support Katrina Casey. More>>

ALSO:

Dog & Lemon: FBI Disagrees With NZ Government Over Police Chases

Multiple studies, quoted by the FBI, show that once suspects realise they're no longer being chased; they tend to slow down to normal driving speeds and therefore become far less of a risk. The FBI report also categorically rejected the argument that abandoning police chases meant ‘giving in’ to offenders. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news