Michael Barnett, Auckland Chamber of Commerce CEO said that while it looks likely that the Reserve Bank will tighten interest rates later this week, it should not be accepted as inevitable.
Government has promised increased spending on everything from student loans, holiday pay, minimum wage, and superannuation. Also not helping to keep inflation in check are the increased costs of complying with government regulations and actions by local authorities to put up rates – there are very few who haven't lifted rates by less than 5 percent.
“While it is understandable that the Reserve Bank - whose sole job is to keep inflation within a 1-to-3 percent guideline – might be keen to tighten interest rates when it makes the call on Thursday, the medicine might be easier to take if it sharpened its call on Government to reign in its expenditure,” said Mr Barnett.
Not helping the case for business to improve productivity and lift earnings is that New Zealand's interest rates are already among the highest in the developed world.
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Submitted by admin on Tue, 2005-10-25 06:00.