Angry reaction to this morning's Official Cash Rate (OCR) rise by the Reserve Bank has been swift in coming.
Michael Barnett, Auckland Chamber of Commerce CEO, noted that part of the justification was that the rise in dairy sector incomes will add to inflation pressures.
"Once again we
are told that the more successful we are, the more we will be punished."
Meanwhile the continuing high government sector spending gets only the briefest of mentions, he added, when clearly this sector going back over the last 2-3 years is the main inflation culprit.
"Blaming inflation on growth success shows we have a deep seated problem in the fundamentals of the economy. On the one hand Government wants businesses to grow and increase wealth, but when businesses do so the Reserve Bank stifles that success and blames the very growth we want for adding to inflation.
"We should be encouraging and rewarding export-led growth - not constraining it. We should be hammering central and local government to keep price increases in non-productive areas like rates and water to below inflation - not passively accepting these rises.
"This is the third rise since March. Is this what he will continue to do until growth is squeezed out of the economy?
"What we are doing is not working. It's time the Government and Reserve Bank inquiry launched last year into a better way to encourage growth and control inflation was given some urgency", concluded Mr Barnett.
Meanwhile, the latest rise in the OCR strengthens the need to re-write the Reserve Bank Act, was the view of New Zealand First economic development spokesperson Doug Woolerton.
"This is the third time this year that the Cash rate has been raised. The Reserve Bank's myopic focus on interest rates only attracts more foreign investment, hurting our exporters, businesses and homeowners," said Mr Woolerton.
"The Reserve Bank Act must be rewritten to make exchange rates and employment targets central to monetary policy. Only then can we stop hurting the sectors of our economy we should be helping the most," said Mr Woolerton.
