The Reserve Bank was forced to cut the Official Cash Rate (OCR) today in a bid to drive down the high New Zealand dollar and address growing imbalances in the New Zealand economy, the Green Party said today.
The Reserve Bank cut the OCR today by 25 basis points to 2.0 per cent, with Governor Graeme Wheeler signalling further cuts were likely.
“The Reserve Bank has been forced to cut the OCR in an attempt to address growing imbalances in the New Zealand economy,” Green Party finance spokesperson Julie Anne Genter said.
“The Reserve Bank has had to show economic leadership because the National Government has failed to do so.
“The critical earning part of our economy — the export and import-competing sectors — are under significant pressure from the high New Zealand dollar.
“The real New Zealand economy is suffocating under National’s short-term, politically expedient approach. The Governor called house price inflation ‘excessive’ and raised the stakes of a major shock to the economy should house prices correct.
“National’s failure to stop housing speculation and build enough affordable homes is making the wider economy more vulnerable to damaging economic shocks.
“National are failing to run a productive, jobs-rich, and export-focused economy.
“Responsible measures like a comprehensive capital gains tax (excluding the family home) and restricting land sales to citizens and permanent residents would ease pressure on the exchange rate and show real economic leadership where there is currently silence,” Ms Genter said.