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No Surprises in OCR Cut

Rt Hon Winston Peters

New Zealand First Leader

Member of Parliament for Northland

No Surprises in OCR Cut

There are no surprises in today's official cash rate cut but beneath the bland words there is a landscape full of uncertainty and volatility, says New Zealand First Leader and Northland Member of Parliament Rt Hon Winston Peters.

"Lower mortgage rates will only add to the Auckland property bubble - as the Reserve Bank Governor Graeme Wheeler points out again.

"Auckland needs an extra 8,500 houses annually just to cope with immigration numbers, with net migration at 58,300.

"The Governor is right to be concerned about the dairy debt at $35 billion and its relative concentration in a small proportion of the sector. What the Governor didn't mention is also of concern, and that is after this third consecutive cut there is a clear indication that it is not filtering down to small business and farmers.

"Before this cut in the OCR the banks enjoyed a healthy margin approaching 3 per cent on business lending. On business overdrafts this margin has been over 7 per cent.

“Business interest rates and the Auckland property bubble may help to explain why the big five banks made a collective net profit of $1.69 billion in just the three months to June 30.

"In summation, the economy is not firing on all cylinders as claimed by Messrs Key, English and Joyce and that is why the Governor of the Reserve Bank has been progressively coming to the economy's assistance in these and future promised cuts. What is also clear is that last year's rises in the OCR were plainly without merit," says Mr Peters.


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