Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

More uncertainty – not a time to be tentative


4 December 2008

More uncertainty – not a time to be tentative

Reserve Bank Governor Dr. Alan Bollard has cut the Official Cash Rate (OCR) 150 basis points this morning easing the pressure on the economy. The New Zealand Manufacturers and Exporters Association (NZMEA) welcome the cut, but point out that further monetary policy loosening is possible to support the real economy now that inflationary pressure is falling. Another rate cut of 100 basis points in January is likely to be needed.

NZMEA Chief Executive John Walley says, “The focus needs to be on supporting the real economy as we work towards an economic revival. Given our trading partners are likely to decline further next year, it is important to get our interest rates into an expansionary setting so that exporters can take advantage of overseas markets while they are still there. We called for a 200 point cut this time, which could have delivered more stability until the end of the first quarter of 2009, but now another cut will be necessary in January.”

Interest rate cuts from our trading partners mean that New Zealand still has one of the highest cash rates in the developed world. Other countries have demonstrated they are more concerned about their economies than they are about inflation, as the extent of the financial crisis widens. There has also been growing concerns over deflation, particularly in the United States.

“It is a shame that the Reserve Bank Act has not allowed Dr. Bollard to act sooner to stimulate the economy,” says Mr. Walley. “We have already suffered two quarters in recession and only now are we moving towards a position where an export led recovery can occur.”

“Dr. Bollard’s comment that ‘domestically generated inflation (particularly local body rates and electricity prices) is remaining stubbornly high’ demonstrates the problem with our current system. How interest rates are supposed to control electricity prices and council rates is beyond me.”

“An alternative method of controlling inflation would have avoided interest and exchange rates stifling the economy. An export target included in the Reserve Bank Act would have allowed cuts to address the more pressing problem of a declining economy, rather that continuing to focus on inflation.”

“Alternatives to our current system do exist, or is what we have working so well that we don’t need to change?”


ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

DoC: A Tale Of Two Halves For Rock Wren/Tuke
It’s a tale of two halves for rock wren/tuke with their fortunes hanging on effective predator control, the latest South Island-wide survey shows. The Department of Conservation monitoring programme, now in its third year, tracks populations of this small alpine bird... More>>


TradeMe: Wages Remain Hot While Job Listings Cool Off
Salaries are skyrocketing in the regions as Kiwi employers battle to attract staff and combat the rising cost of living, according to the analysis of over 77,000 vacancies listed on Trade Me Jobs for the quarter ending 30 June (Q2)... More>>



Tegel: Chicken Prices On The Rise But It’s Still The Favourite Protein For Kiwi Families

A combination of domestic and international factors is forcing New Zealand’s largest poultry supplier Tegel to raise its prices from July. The roughly 10% price rise is a result of ongoing cost pressures on the industry, including increases in labour... More>>



Motor Industry Association: New Vehicle Registrations Soften

The Motor Industry Association’s Mark Stockdale says that 12,049 registrations of new vehicles for the month of June shows the market is weakening in the face of raising costs of living... More>>



MYOB: New Data Shows Increase In SMEs Experiencing Stress And Anxiety

The lingering impacts of the COVID-19 pandemic have led to a surge in the number of local SME owners and operators experiencing stress and anxiety, according to new research from business management platform, MYOB... More>>



Carbonz: Cashing In On Carbon: The New Marketplace Helping Native Forest To Thrive

The country’s first voluntary carbon credit marketplace, Carbonz, is here to restore native biodiversity and help Aotearoa reach its carbon zero goals by selling the first carbon credits exclusively from native forest... More>>