Hold OCR but send a message, farmers urge

With a mountain of compliance costs about to hit the economy, Federated Farmers believes the Official Cash Rate (OCR) must be left on hold but the Reserve Bank needs to send Government a strong message.

“There’s frankly no need now or anytime soon to lift the OCR, “says Don Nicolson, President of Federated Farmers.

“There are already extra costs on the horizon from increased Accident Compensation levies, the impending Emissions Trading Scheme (ETS) and potentially, an increase to GST. These costs will do the Reserve Bank’s job by taking ‘steam’ out of the domestic economy.

“The fact is exporters are at last getting some foreign exchange relief as the international community realises we are not part of Australia. With Australia lifting its cash rate 25 basis points to 4 percent, Kiwi exporters have welcome clear air.

“We are hoping the Monetary Policy Statement won’t pull any punches as we are living well beyond our means. The international recovery is precarious and Greece and Iceland are putting sovereign debt under the spotlight.

“Our message to the Reserve Bank is to hold fire on increasing the OCR while sending a clear message to Government to reign in fiscal policy,” Mr Nicolson concluded.