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

 


RBNZ Crocodile Tears

RBNZ Crocodile Tears

The Reserve Bank of New Zealand’s (RBNZ) decision to increase the OCR by 25 basis points to 2.75% today is too early, and has the potential to further damage the tradable sector; say the New Zealand Manufacturers and Exporters Association (NZMEA).

NZMEA Chief Executive John Walley says, “Early increases in our OCR puts us further out of line with the rest of the world in terms of monetary policy, which will have the effect of appreciating our already overvalued exchange rate. This is a major concern for exporters and import competing manufacturers.”

“The OCR increase will marginally increase borrowing costs for firms, but for most exporters, the margin lost through the exchange rate is an order of magnitude greater and as such much more damaging.”

“While the RBNZ once again has said they do not believe the current level of our exchange rate is sustainable in the long run, we are yet to see any policy response that does more than shed crocodile tears about the problem.”

“This change, and more generally the absence of a real policy response, will not be welcomed by the traded sector.”

“Inflation is important, but inflation pressures reside in the non-traded economy and interest rates do little to moderate inflation in that sector; reductions in headline inflation rely on deflation in the traded sector. For the traded sector the exchange rate determines what sort of margin gets banked, and margins are thin right now.”

“We saw all this before in the lead up to the global financial crisis, demonstrating the need for better targeted tools for the RBNZ to tackle inflation, without the broad and damaging effects of an overvalued exchange rate on the tradable sector from the OCR carpet bombs.”

“LVR “speed limits” were a step in the right direction, and seem to be having a significant and targeted effect on the housing market.”

“We need more smart, targeted policy, not more carpet bombs.”

ends

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

PARLIAMENT TODAY:

Royals: The Prince Of Wales And Duchess Of Cornwall To Visit

Prime Minister John Key welcomes today’s announcement that the Prince of Wales and The Duchess of Cornwall will visit New Zealand in November. This will be the second joint visit for Their Royal Highnesses to New Zealand. More>>

ALSO:

Tracey Martin Replaced: Ron Mark Is New New Zealand First Deputy Leader

Clayton Mitchell was the successful candidate for the Associate Whip position. Winston Peters was re-elected as Leader by the Caucus. Ron Mark was elected as the Deputy Leader with effect from 10am, Friday, 3rd July. More>>

ALSO:

Rebuild Rebrand: "Regenerate Christchurch" To Replace CERA

The regeneration of Christchurch will be the city’s focus for the next five years as local leadership progressively takes control of the rebuild, Canterbury Earthquake Recovery Minister Gerry Brownlee says. More>>

ALSO:

Nauru: Scholars Urge Minister To Act On Deteriorating Democracy

“Since the 2013 election in Nauru, there has been a series of disturbing developments on the islands that indicate a severe deterioration in the state of its parliamentary democracy and in the rule of law,” say the scholars. More>>

ALSO:

Foreign Affairs: NZ Begins Presidency Of UN Security Council

Prime Minister John Key has welcomed the start of New Zealand’s month-long Presidency of the United Nations Security Council in New York. More>>

ALSO:

Labour: Cash For Charter Schools, Mould For State Schools

“Recently released financial statements show the Whangarei charter school He Puna Marama received $3.9 million in government funding to the end of last year. Yet their audited accounts show they only spent $1.4 million on education, leaving almost $2.5 million over two years unaccounted for." More>>

ALSO:

Kiwirail Plans Shift From Electric: National Urged Not To Take Backwards Step

The National Government shouldn’t drag New Zealand backwards by replacing its climate friendly electric trains with carbon-polluting diesel trains, the Green Party said today. More>>

ALSO:

Capital Connection:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news