Media statement Thursday, July 23rd, 2003

OCR adjustment reassuring for money movers

Today's well telegraphed 0.25% adjustment to the Official Cash Rate will reassure international money movers that New Zealand is a good place to park billions of dollars, says the Employers & Manufacturers Association (Northern).

"Today's 025% adjustment was timid," said EMA's chief executive Alasdair Thompson.

"At 5% our OCR is too high compared to the US rate of 1%, Japan's 0.75%, Australia's 4.75% and likely to drop, and the Eurozone rate of 3%.

"Our high interest rate attracts international money movers, and their snapping up of kiwi dollars for the short term returns available.

"That drives up the $NZ at the expense of our exporters, and growth in the New Zealand economy, at a time when inflation isn't the problem."

ENDS