HOT TOPICS:   Budget 2013   |   House prices  |    Term deposits

In this section

Should the Reserve Bank of New Zealand do more to try and weaken the strong New Zealand dollar?

January 30, 2013 - 01:49pm, Gareth Vaughan
Choices
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.
8 + 1 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.

2 Comments

by Stephen L | 30 Jan 13, 3:24pm

My vote would actually be for

My vote would actually be for not cutting the OCR; but printing or intervening by selling dollars (and buying foreign assets)- which I believe are the same thing. I assume when they sell NZD, that they are in fact printing those dollars, rather than taking them out of circulation. 
A lower OCR probably just boosts house prices, but won't really help trading industries, and recent history suggests it does not help the exchange rate lower; but does hurt savers and encourage consumption, the wrong signals at present.
It's a side issue, but if the RB are acting, then a shortcut to buying foreign assets, when the Treasury are rabidly borrowing from foreigners, or wanting to sell them assets, would be to have the RB print and loan the money to the Treasury. But I suppose the more circuitous route is at least next best choice, if in fact they have started.

by Exponential Naivety | 31 Jan 13, 2:03pm

I agree, the poll should have

I agree, the poll should have given a split option, whereby no to an OCR cut as a way of addressing housing inflation vs. low overall (import related) inflation - but yes to some other forms of monetary intervention as way of dampening the hot $NZ.
Rocks and hard places!
Lowering the OCR increases a housing-led spin on inflation figures - and lowering the $NZ raises the import-led spin on inflation figures!
Hmmm...is that why the easiest solution is to watch and wait...watch and wait....Wait!...Watchout!