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Governor must lower OCR, Greens say

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Governor must lower OCR, Greens say

3News NZ

Co-leader Russel Norman says inflation is running below expectations and the New Zealand dollar is trading at near record levels

Co-leader Russel Norman says inflation is running below expectations and the New Zealand dollar is trading at near record levels

Reserve Bank governor Graeme Wheeler must lower the official cash rate (OCR) on Thursday to take the pressure off the exchange rate and protect jobs in exporting and manufacturing, the Green Party says.

Co-leader Russel Norman says inflation is running below expectations and the New Zealand dollar is trading at near record levels.

"The governor can't continue to sit on his hands while the runaway dollar leads to job losses and reduces the competitiveness of our export sector," he said today.

"A decision to leave the OCR unchanged tomorrow is a conscious decision that will wreck a vital part of the New Zealand economy."

Economists widely expect Mr Wheeler to hold the rate at 2.5 percent and that is also the official line of the New Zealand Institute of Economic Research's shadow board.

Ahead of the decision, economists have noted that Mr Wheeler has a tough call in weighing a strong property market, fuelled further by the Christchurch rebuild, against a stubbornly weak economy.

NZN

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Comments

31/01/2013 8:03:34 a.m.

Mike wrote:

The Greens/Labour been calling for higher interest rates due to the housing shortage pushing up Auckland home prices, in the claim this will make mortages more expensive for everyone and drive some prospectors out the housing market? This seams at odds with the new lowering claim.

The reality is our OCR is the lowest its been in many decades, and lowering it will do little as its not our OCR driving our exchange rate, but the poor performance of others in comparison to NZ. Eg the US printing money that the Greens wanted to do, has lowered their dollar, The EU bailing out 5 countries with others on the brink of needing bailing out.

The only true way to lower our dollar to those poor performers is through poor performance, which the Greens want.

We still have a lower currency than our trading partners. Be it US/UK/EU/Aus/Japan/China (who deal mostly in US$).

Under Labour/Greens 1999-2008 what happened to NZ wages? Well take the min wage, during those years it hovered between 35th and 39th in the world. Now our min wage around 5th highest in the world, but Greens and Labour want to reduce real wages by devaluing our dollar and giving us high inflation. What will happen to prices if we devalue our currency? They can only go up. Many NZ prices set by international prices, eg dairy, so a lower currency can only see higher local prices. We export much, which would see higher prices with a lower dollar. The Greens and Labour are really asking for lower real wages and high inflation with their currency lowering policy.

30/01/2013 10:58:51 p.m.

Jim Seaview wrote:

I thought that the Greens policy of "Quantitive Easing" was dead and buried, but I suppose if that is their policy, backed by the labour party then it will always rear its ugly head. The Greens dont talk about QE anymore. To think that are both the Greens & Labour are going to join forces and present themselves to the electorate as an alternative potential Govt to the Nats in 2014 is unbelievable. Who is going to be minister of Finance is the big question? Should be someone with strong arms to be able to turn the handle of the large printing press, printing us all large wheel barrow loads of worthless money while they manage the OCR?????

30/01/2013 7:05:08 p.m.

eddie wrote:

Heehee...Greens, keep digging...Labour will fall with them into oblivian...National to govern alone in 2014 as the 5 headed monster of Labour/greens/Mana/Winnie 1st and perhaps Maori party will frighten the whole country...delicious.....now tell me again lefties what you think of labour lies about 'affordable' housing for $300K?...ohh wait a back down already from Shearer...ummm err ummm