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

Gordon Campbell:
On Anne Tolley’s
Callous Folly

Years ago, I remember someone in the Heath Ministry telling me off the record that regulatory oversight in this country largely consisted in ‘waiting for something to turn green or fall off somebody’ before the authorities would swing into action...

Last week’s conflict between Social Development Minister Anne Tolley and District Court judge Carolyn Henwood illustrated quite a few of the flaws in the system. More>>

 

Members’ Bills: Greens' Domestic Violence And Loans Bills Pulled From Ballot

Jan Logie’s Domestic Violence-Victims' Protection Bill introduces workplace protections for victims of domestic violence, including allowing victims to request paid domestic violence leave for up to 10 days... Gareth Hughes’ Bill allows Kiwis with student loans to defer their student loan repayments into a first home savings scheme. More>>

ALSO:

IPCA: Police Did Not 'Deliberately' Use Pepper Spray On 10-Year-Old

"When spraying the man, the officer did not properly consider the necessity of using pepper spray in a confined space, the likelihood that it would affect the other innocent passengers or the fact that he was using a more powerful spray." More>>

ALSO:

Donor Bill Passes: Full Income Compensation For Live Organ Donors

Unanimous cross-party support for the Compensation for Live Organ Donors Bill represents a critical step in reducing the burgeoning waiting list for kidney donations, according to Kidney Health New Zealand chief executive Max Reid. More>>

ALSO:

Earthquake Response: Emergency Legislation Prepared

Three new Bills have been drafted in the wake of the magnitude 7.8 earthquake on November 14 to ensure the government can enable affected communities to respond quickly and efficiently. More>>

ALSO:

Housing MPs: New Building(s) For Parliament

A new building will be erected on Parliament grounds to house Members of Parliament and their staff who currently work in leased accommodation in Bowen House. The plan has cross-Party support, apart from NZ First, said Parliament’s Speaker, Rt Hon David Carter. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news