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Interest Rate Rise Reponse
8 March 2007
Interest Rate Rise Reponse
The Reserve Bank interest rate hike with a threat of more to come in an environment where growth is projected to be 1.8% percent but should be 4% if we are to compete with nations we like to compare ourselves with, is hard to follow. With Export Year 2007 underway, we should be doing everything possible to encourage more growth, not reinforcing a continuing trend of a contracting manufacturing sector.
Targeting the housing sector when government sourced inflation is the real culprit is disappointing.
The Reserve Bank’s assessment of alternative measures to support the OCR and encourage a growth-led economy is taking far too long and should be completed with urgency.
In short, the implication for business of the interest rate hike and the Reserve Bank’s reluctance to directly challenge government-sourced inflation will be to ‘hunker down’ and focus on survival rather than growth.
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