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Green Party claims 'misguided'

It’s more than just the low official cash rate keeping the dollar high, says ANZ chief economist Cameron Bagrie.

Wednesday, January 30th 2013, 4:24PM
by Susan Edmunds

The Green Party has called for theOfficial Cash Rate to be cut tomorrow to take the pressure off the exchange rate and protect export jobs.

Co-leader Russel Norman said: “With inflation running below expectations and the New Zealand dollar now trading at near-record levels, Graeme Wheeler must act to protect jobs in our export and manufacturing sectors by cutting the OCR.”

He said the OCR announcement should balance the relative problems facing the whole economy, not just look at inflation.

But a poll of economists found that none expect the OCR to be cut. All 13 said the next move would be up.

And Bagrie said it was misguided to say that the OCR was keeping the currency low. He pointed to the Australian situation, where the Reserve Bank had been cutting rates for some time but the dollar was still very high.

He said there were other factors at play, including the weakness of the US dollar and diversification away from US assets.

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