Govt Reacts Positively to Reserve Bank’s OCR Decision
Cries of celebration from the government benches were heard at Parliament today, following the Reserve Bank's cut to the Official Cash Rate (OCR).
"Today is a good day," Cabinet Minister Louise Upston exclaimed during General Debate. "We have good news for every New Zealand household and business that their mortgage rates are coming down."
"Good news today," her colleague Chris Penk echoed. "Interest rates are declining. The stimulatory effect on our New Zealand economy is going to be great."
"Today is a good day," Cabinet Minister Louise Upston exclaimed during General Debate. "We have good news for every New Zealand household and business that their mortgage rates are coming down."
"Good news today," her colleague Chris Penk echoed. "Interest rates are declining. The stimulatory effect on our New Zealand economy is going to be great."
As anticipated, the Reserve Bank lowered its base cash rate by 25 basis points to 3 percent, a three-year low, on Wednesday, leaving room for additional declines.
The economy has stopped in recent months, according to the central bank, as firms and individuals have become cautious due to rising prices, a difficult labor market, and uncertainties across the world.
It stated that although headline consumer inflation was moving closer to the top of its wider 1-3 percent band, underlying inflation pressures were still predicted to attain its target of about 2 percent.
In response to the announcement, the prime minister and finance minister attended a press conference at Parliament on Wednesday afternoon, telling reporters that the decision will provide the economy with more impetus.
According to Christopher Luxon, New Zealand has experienced a challenging time, but the "road to recovery looks good." Homeowners, he claimed, would have more disposable income and, consequently, more money to spend.
"We have about 40 percent of people in New Zealand who will be refinancing their mortgages in the next six months, so they will really start to feel the benefits of those lower interest rates transmitting through the economy, which is really fantastic news."
Nicola Willis reiterated the view, stating that "lower interest rates certainly support that, and what we want to see is people having the confidence to be spending in the economy."
The economy has stopped in recent months, according to the central bank, as firms and individuals have become cautious due to rising prices, a difficult labor market, and uncertainties across the world.
It stated that although headline consumer inflation was moving closer to the top of its wider 1-3 percent band, underlying inflation pressures were still predicted to attain its target of about 2 percent.
In response to the announcement, the prime minister and finance minister attended a press conference at Parliament on Wednesday afternoon, telling reporters that the decision will provide the economy with more impetus.
According to Christopher Luxon, New Zealand has experienced a challenging time, but the "road to recovery looks good." Homeowners, he claimed, would have more disposable income and, consequently, more money to spend.
"We have about 40 percent of people in New Zealand who will be refinancing their mortgages in the next six months, so they will really start to feel the benefits of those lower interest rates transmitting through the economy, which is really fantastic news."
Nicola Willis reiterated the view, stating that "lower interest rates certainly support that, and what we want to see is people having the confidence to be spending in the economy."
According to Willis, the Bank also predicted additional cuts were on the way. While she and Luxon agreed that households would make their own choices about saving and spending, they also believed that confidence would grow with time.
"It's true that as unemployment is forecast to reduce and as growth is forecast to recover, that will support greater levels of confidence in the economy, and therefore it is likely that many households and businesses will think, yep, this is the time to start spending."
According to Willis, the "objective data" indicated that things are "absolutely getting better, and you should feel confident about that."
"It's true that as unemployment is forecast to reduce and as growth is forecast to recover, that will support greater levels of confidence in the economy, and therefore it is likely that many households and businesses will think, yep, this is the time to start spending."
According to Willis, the "objective data" indicated that things are "absolutely getting better, and you should feel confident about that."
Although she admitted that individuals were still paying exorbitant costs at the supermarket, she claimed that Foodstuffs and Woolworths had the "power in their hands" to guarantee that prices for New Zealanders were reduced.
"They can exercise it any day they like."
Saying "there's a choice" in the way the nation discussed the economy, Willis also criticized the opposition and others who were critical of the current situation of the economy.
"Do we talk ourselves into an ongoing funk, or do we look ahead and recognize that things will get better?" she replied.
She claimed to be aware that opposition "doomsayers" and "merchants of misery" who denigrated the New Zealand economy were heard in families every day.
"They can exercise it any day they like."
Saying "there's a choice" in the way the nation discussed the economy, Willis also criticized the opposition and others who were critical of the current situation of the economy.
"Do we talk ourselves into an ongoing funk, or do we look ahead and recognize that things will get better?" she replied.
She claimed to be aware that opposition "doomsayers" and "merchants of misery" who denigrated the New Zealand economy were heard in families every day.
"Now is not the time to be talking down the New Zealand economy," Willis said. "The data doesn't lie. The Reserve Bank is self-governing. They don't have political views.
Following the OCR cut, the right-leaning Taxpayers' Union warned the coalition government not to rest on its laurels and to cut in its "reckless spending".
Willis shot back, pointing to the Reserve Bank's indication that the government's decisions were making a difference.
"I'd encourage the Taxpayers' Union to read the monetary policy statement report, because it explicitly calls out ... that in the medium term, the fact that the government is reducing spending as a share of GDP will reduce inflation pressure.
Following the OCR cut, the right-leaning Taxpayers' Union warned the coalition government not to rest on its laurels and to cut in its "reckless spending".
Willis shot back, pointing to the Reserve Bank's indication that the government's decisions were making a difference.
"I'd encourage the Taxpayers' Union to read the monetary policy statement report, because it explicitly calls out ... that in the medium term, the fact that the government is reducing spending as a share of GDP will reduce inflation pressure.
"There are other people who agree with us that our fiscal decisions are lowering inflationary pressure and promoting lower interest rates. The Reserve Bank is specifically pointing that out.
She suggested the Taxpayers' Union might believe it's a good idea to stop funding hospitals and schools and to stop providing assistance to needy Kiwi families: "I disagree."
Associate Finance Minister and ACT leader David Seymour claimed that the cut will benefit businesses, borrowers, and mortgage holders.
"There are lots of people who want this whole thing just to go faster, but there are no shortcuts."
She suggested the Taxpayers' Union might believe it's a good idea to stop funding hospitals and schools and to stop providing assistance to needy Kiwi families: "I disagree."
Associate Finance Minister and ACT leader David Seymour claimed that the cut will benefit businesses, borrowers, and mortgage holders.
"There are lots of people who want this whole thing just to go faster, but there are no shortcuts."
He said that ACT would have done more to reduce public spending. According to Seymour, that might translate into annual savings of $7 billion or $8 billion, consistent with the alternative budgets that ACT published while it was in opposition.
"That sounds like a lot of money, when you consider that the government's currently spending $142b, what we're really talking about is about a 5 percent reduction, and I still think that's necessary."
He claimed that unemployment was roughly where it was predicted to be a few years ago and that things would get better if the government continued to restrain expenditure.
"That sounds like a lot of money, when you consider that the government's currently spending $142b, what we're really talking about is about a 5 percent reduction, and I still think that's necessary."
He claimed that unemployment was roughly where it was predicted to be a few years ago and that things would get better if the government continued to restrain expenditure.
Some may like the cut, according to the Greens, but the Reserve Bank's move would not help those left behind by government policies that were increasing homelessness and poverty.
Even while individuals who have mortgages will benefit somewhat from the OCR drop, Luxon's policies have left an increasing proportion of New Zealanders without a home.
According to reports released today, families are being forced to choose between living on the streets or in dangerous boarding houses, said Chlöe Swarbrick, a co-leader of the Green Party.
Monetary policy, according to Swarbrick, is a feeble tool; "it is fiscal policy - that is, the government's choices on tax and spend - which dictates who wins and who loses in our economy."
Even while individuals who have mortgages will benefit somewhat from the OCR drop, Luxon's policies have left an increasing proportion of New Zealanders without a home.
According to reports released today, families are being forced to choose between living on the streets or in dangerous boarding houses, said Chlöe Swarbrick, a co-leader of the Green Party.
Monetary policy, according to Swarbrick, is a feeble tool; "it is fiscal policy - that is, the government's choices on tax and spend - which dictates who wins and who loses in our economy."