Earthquake OCR cut welcomed by Federated Farmers

This morning’s cut of the Official Cash Rate (OCR) to 2.5 percent comes as no surprise following the devastation of the Christchurch Earthquake in addition to concerns about our already sluggish economy.

“We welcome Dr Bollard’s announcement of a 0.5 percent cut to the OCR. The damage and dislocation of the earthquake as well as the slump in business and consumer confidence has made the cut inevitable,” says Don Nicolson, Federated Farmers president.

“While inflationary pressures are building they are largely either imported, such as petrol prices, or from government imposed costs such as local authority rates, excise tax increases, the ETS, and ACC levies.

“However, we are concerned that cost pressures could easily spread through the wider economy and we will be urging the Reserve Bank to ensure it does not let inflation get out of control.

“Its now more important than ever that government acts prudently and does not increase spending on non-earthquake related projects, or impose any increased fees and charges. This will only increase inflation and make the Reserve Bank’s job harder.

“This OCR cut should offer a respite to business and the exporting community as a whole. We’re sure our government will lead by example and take a serious look at its books,” Mr Nicolson concluded.