Interest Rate Cuts must be Passed on in Full

Media Release
12 March 2009

Interest Rate Cuts must be Passed on in Full

The Wellington Regional Chamber of Commerce has welcomed the 0.5% cut in the Reserve Bank’s Official Cash Rate and urged banks to pass on the lower interest rates.

“Businesses are telling us that banks are slow to pass on the reductions in wholesale rates,” said Chamber CEO Charles Finny.

“Increased business investment will be the key to the economic recovery. It is crucial that lower interest rates are passed on to businesses for this to occur and to give economic activity a boost.

“In this regard we are pleased that Reserve Bank Governor, Alan Bollard, has encouraged financial institutions to continue lending on sound business propositions and we welcome the bank reductions that have been announced post today’s announcement.

“The 0.5% cut was at the lower end of expectations but leaving the OCR at 3% for now seems sensible as it leaves the Reserve Bank with room to move as things get tougher. It is now up to the banks to play their part,” Mr Finny concluded.

ENDS

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