Looking for more flow through from OCR cut

Media statement Thursday, April 30th, 2009

Business looking for more flow through from OCR cut

Business will be watching closely to see how the cut to the OCR today flows through to their borrowing costs, the Employers & Manufacturers Association (Northern) says.

The Reserve Bank dropped the Official Cash Rate from three to 2.5 per cent, below Australia's Cash Target.

"Earlier in the year the banks were slow to move business interest rates down," said Alasdair Thompson, EMA's chief executive.

"The margin in Australia between their variable or floating rate and Cash Target is about 2.8 per cent whereas as of today ours was 3.49-3.99 per cent so it appears there may be room to move.

"A survey we did early in the year in association with Business NZ on credit and employment showed that smaller businesses were finding the terms for accessing credit had become more difficult.

"To minimize long term harm from the crisis to our businesses the banks need to respond to a business's mid term prospects lest they lose the company's loyalty when the recovery begins."

ENDS

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