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

 

Expansionary settings – still some way to go

5 December 2008

Expansionary settings – still some way to go

Reserve Bank Governor Dr. Alan Bollard described our monetary policy settings as expansionary yesterday. This claim was made in the face of the fact that New Zealand continues to have interest rates far above those of our trading partners. The New Zealand Manufacturers and Exporters Association (NZMEA) point out that monetary policy settings must be considered in relation to our competitors and the state of world markets – competitive interest rates and policy settings are needed to encourage the real economy.

European central banks have made considerable rate cuts overnight with Sweden cutting 175 basis points to 2%, the European Central Bank cutting 75 basis points to 2.5% and the Bank of England cutting its rate 100 basis points to 2%. This makes New Zealand’s rate of 5% look well behind the pace.

NZMEA Chief Executive John Walley says, “The cuts elsewhere put Dr. Bollard’s in perspective. The 150 point cut was a start, but considered against interest rates elsewhere it has to be seen as overly cautions and to what end? The reticence of most banks to pass on these rate cuts is an increasing concern.”

The Government has also signalled a resistance to change policy settings to help work through the global slowdown. Treasury’s report recommending a Capital Gains Tax was dismissed without consideration by Bill English; perhaps the first step of a ‘no change’ trend from the Government.

“Post election popularity seems to be winning out over economic sense. The most worrying aspect of this reaction is that the merits of the Treasury proposals have not even been debated or considered as the Government blindly sticks to a preconceived ideology. The world economic climate is changing far too quickly for this ‘business as usual’ approach.”

“If we are to see continued growth in our economy we need settings put in place for export and job growth. That means stabilising interest and exchange rates so that returns from productive investment and capacity expansion can be reasonably anticipated. A return to the debt funded domestic economy will not provide a long-term answer.”


ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 


FIRST Union: Do Shareholders Realise Marsden Point Conversion Could Cost More Than Half A Billion Dollars?

FIRST Union, the union representing workers at Refining NZ, are querying whether shareholders voting on Friday on whether to convert the Marsden Point refinery to an import-only terminal realise the conversion could cost $650-700 million dollars... More>>



Civil Contractors: Massive Rebound In Civil Construction Business Confidence

New Zealand’s civil construction industry is riding a massive rebound in post-pandemic business confidence – but this may be undermined by skills shortages, which continue to be the industry’s number one challenge... More>>



Energy: Feeling Our Way Towards Hydrogen - Tina Schirr

Right now hydrogen is getting a lot of attention. Many countries are focusing on producing hydrogen for fuel, or procuring it, or planning for its future use... More>>





ASB: New Support Finder Tool Helps Connect Customers With Thousands In Government Support

ASB research alongside benefit numbers from the Ministry of Social Development shows an increased number of Kiwis are struggling financially, and many may not be aware they’re eligible for government support... More>>


Housing: New Home Consents Continue To Break Records

A record 44,299 new homes were consented in the year ended June 2021, Stats NZ said today. “The annual number of new homes consented rose again in the June 2021 year, the fourth consecutive month of rises,” construction statistics manager Michael Heslop said... More>>


Real Estate: June Home Transfers Remain High
There were 44,517 home transfers in the June 2021 quarter, the highest June quarter figure since 2016, Stats NZ said today. The number of home transfers was very similar to the March 2021 quarter and was up 18,252 from the June 2020 quarter... More>>