OCR hike reckless

OCR hike reckless

The Reserve Bank’s decision to hike the Official Cash Rate to 2.75 percent is hasty say the New Zealand Manufacturers and Exporters Association (NZMEA). The decision has come despite poor sales results in our productive sectors and weakness in our trading partner economies. It will hurt exporters and ultimately any recovery.

NZMEA Chief Executive John Walley says, “We do not share the optimism from the Reserve Bank on the rate of recovery. Currently the main drivers of the projected inflation rate are a GST rise, an increased tobacco tax and the Emissions Trading Scheme. These one off factors should not trigger an OCR rise.”

“Business confidence surveys have indicated that expectations have improved but real measures of sales, investment and employment tell, at best, a weak recovery story”

“This combined with the risks posed by financial instability in Europe, a sluggish recovery in the United States and higher risks in Australia make the OCR decision difficult to appreciate. We have already seen the dollar climb after the decision and this could do some major damage to any rebalancing of the economy.”

ENDS

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