Maintaining Growth Is Critical

3 July 2002

The Reserve Bank's decision to again raise the OCR by 25 basis points reinforces the desirability of reviewing the Policy Targets Agreement following the appointment of a new Governor, Business NZ Chief Executive Simon Carlaw said.

"While the Reserve Bank has certainly dealt to inflation, its Australian counterpart has managed the balance between consistent economic growth and price stability better. Our Government should be looking hard at the reasons why this is so.

"Even though the Bank's focus is directed twelve or eighteen months out, it is difficult to ignore the emerging evidence of a significant shift in business and exporter confidence that is driven largely by the appreciation of the New Zealand dollar and continued uncertainty in our key global markets.

"It seems critical at this time to focus on maintaining growth and the key role of exporters in the economy rather than CPI assumptions that have been significantly under previous Reserve Bank forecasts," Mr Carlaw said.

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