Low Interest Rates are Crucial for Recovery

Low Interest Rates are Crucial for Continued Economic Recovery

Businesses will be pleased with today’s decision by the Reserve Bank not to lift interest rates but they will be concerned with the prospect of rate rises over the coming months, as signalled by the Bank, according to the Wellington Regional Chamber of Commerce.

“There is considerable uncertainty for the global economic outlook at this time and we are not convinced that interest rate rises will be in the best interests of the New Zealand economy,” said Chamber CEO Charles Finny.

“Dr Bollard acknowledged in his statement today that consumers are cautious and business spending is weak. It is important that lower interest rates are maintained so as not to further undermine these sentiments.

“With the fragility of the economic recovery and the global economic uncertainty, we do not see any rate rise being justified before October this year at the earliest.

“Even then the Reserve Bank will need to satisfy businesses that demand is excessive and that undue inflationary pressures are present before they will accept a rate rise.

“Increased business investment will be crucial to sustaining the economic recovery. Interest rate rises will jeopardise that and must be avoided if we are to fully emerge from the economic downturn unscathed,” Mr Finny concluded.

ENDS

© Scoop Media