Lower interest rate applauded

By Phil Boeyen, ShareChat Business News Editor

Wednesday 19th September 2001

The Reserve Bank's move to slash interest rates has won wide approval.

Early Wednesday the bank followed central banks in the US and Europe by dropping the official cash rate by 50 points to 5.25%.

Business New Zealand chief, Simon Carlaw, describes the move as a prudent response.

"New Zealand's economic well being is linked closely with that of the US and the Reserve Bank's action is timely. It will also go some way towards counteracting any loss of business confidence as a result of recent events in Australia.

The Employers and Manufacturers Association says the cut in rates is most welcome and will calm the trading outlook and build confidence in the bank's willingness to act quickly when required.

""Business compliments Dr Brash on this decisive and timely response," says association boss Alasdair Thompson.

"The action was critical to help settle the anxiety building amongst our exporters and other traders. The cut should also underpin consumer confidence considerably."

Mr Thompson is calling on the bank to drop the OCR even lower when at its scheduled announcement next month, pointing out that US interest rates are now at 3%.

Unions have also welcomed the Reserve Bank's action, calling it a much needed tonic for the economy.
The Council of Trade Unions has welcomed the Reserve Bank initiative to lower interest rates.

"Although economic indicators in New Zealand are generally favourable, the extraordinary events of last week have created considerable economic uncertainty." said CTU economist, Peter Conway.

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