Businesses Welcome Interest Rate Reduction

Businesses will be pleased that the Reserve Bank has reduced the official cash rate by an unprecedented 1.5 percentage points, says the Wellington Regional Chamber of Commerce.

"Today's cut continues the much needed downward path in interest rates. It will provide a solid boost to business confidence and give us the chance to return to growth next year," said Chamber CEO Charles Finny.

"It is essential that banks pass on the lower wholesale interest rates to their customers if today's move is to have the desired impact on economic activity.

"The fact that the Reserve Bank Governor specifically asked financial institutions to do this, and drew attention to widening bank margins in the process, is significant.

"We are pleased some banks have already responded and urge the rest to act immediately in this regard.

"It is also significant that in discussing the outlook for monetary policy, once again the Bank has drawn attention to local government rates as a source of domestically generated inflation.

"We are pleased that some councils are taking steps to cut costs and constrain rate increases and we urge others to do the same.

"The Reserve Bank has made it clear that the consequences of local government excesses are not only excessive rate increases but potentially higher interest rates as well," Mr Finny concluded.

ENDS

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