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OCR cut shows Reserve Bank is still making all the running

This morning’s announcement of a 0.25 per cent cut to the OCR means that the Government has abdicated fiscal policy to the Reserve Bank, says Labour’s Finance spokesperson Grant Robertson. 

“The Reserve Bank is now doing all the heavy lifting and it is rapidly running out of policy ammunition. Governor Wheeler and the Secretary to the Treasury Gabriel Makhlouf have both recently called fiscal policy to be used to help deliver sustainable economic growth. 

“The Governor has again signalled that the housing market is a risk to financial stability. He said that house price inflation remains ‘excessive’. Farmers and exporters are hurting because the dollar is higher than it should be and the Reserve Bank cannot act because of National’s failure to address the housing crisis. 

“This interest rate cut is a recognition by the Reserve Bank that New Zealand families are struggling to get ahead as National stands on the side-lines of the economy. The Governor has made clear that continuing to rely on dairy prices rebounding and high levels of population growth is not a sustainable path. 

“Labour’s economic plan would focus on delivering long term sustainable growth built on decent work with higher wages. Labour would also address the housing crisis through building a 100,000 affordable new homes through Kiwibuild, and cracking down on speculators. 

“Labour will also review the Reserve Bank’s policy targets agreement to ensure that it is delivering for all New Zealanders. It’s time for National to recognise that fiscal and monetary policy need to work hand in hand to deliver a better life for all New Zealanders. Only a Labour led government would deliver on this promise,” says Grant Robertson.