Media statement

For immediate release

Wednesday, March 26, 2003

Copeland praises BERL analysis

United Future finance spokesperson Gordon Copeland today praised the call by economic forecaster BERL in its March forecast that the time was right for the Reserve Bank to reduce interest rates to a level closer to those in Australia.

"I believe it has been clear for some time that at around A93 cents, the NZ dollar is over-valued and that this has resulted, to a significant extent, from the fact that the OCR has been running a full one percent above the Australian equivalent for a considerable period of time. The result in my view has been unnecessarily harsh on the exporting/manufacturing/ productive sector which is the engine room of the NZ economy.

"For that reason I have asked the Governor of the Reserve Bank Dr Alan Bollard to study carefully the linkages between our high interest rate, the extended period of time over which the one percent differential has continued and the sharp appreciation in the NZ-Australian dollar cross rate.

"I note too that the policy targets agreement with the Government requires the Bank "to avoid unnecessary instability in output, interest rates and the exchange rate".

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