Prime Minister John Key would like to hear from US policy makers how they are looking to solve their country’s economic woes, and says he will remind the US Federal Reserve Chairman that a third round of quantitative easing (QE) will hurt the New Zealand economy.
Key is set to leave for the US tonight on a week-long trip that will include meetings with US President Barack Obama, Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke.
How the US tackled its economic woes was for them to decide, although their actions impacted on other countries.
“Obviously everyone’s concerned about the level of debt they have, about what their outlook is for their economy – I mean their unemployment rate’s kicked up to 9.2%,” Key told journalists at his weekly post-cabinet press conference in the Beehive.
“They’ve obviously got very high levels of debt, and not a lot of room to move in fiscal policy, or in monetary policy no room to move. So really it won’t be for us to lecture them, we will be just interested in what their outlook is,” he said.
Asked whether perhaps he would give US policy makers advice on how to run a ‘zero budget’, Key replied the Kiwi delegation was more likely to go in a listening mode than an advising mode.
As the head of Merrill Lynch's foreign exchange trading operations, Key was a member of the foreign exchange committee of the New York Federal Reserve from 1999 to 2001.
'We're really concerned about the high NZ$'
Meanwhile, asked how worried he was on the US government’s attempt to address its debt ceiling, Key said it would be interesting to get a first-hand account of what was happening in the US.
“I think it is a real concern actually when you’ve got Standard & Poor’s starting to say they too, along with Moody’s, may downgrade the United States," Key said.
“What it shows you is that countries cannot take a relaxed and casual perspective to the levels of debt that they have," he said.
That was why Key’s government had produced a ‘zero budget’ this year, with a net debt track that stayed under 30% of GDP and a surplus track of 2014/15.
In his meeting with Bernanke, Key said he would "certainly" point out that the rising NZ/US exchange rate was hurting New Zealand’s export sector, “and we have real concerns about the level of our current exchange rate”.
“But in the end I guess it’ll be our opportunity to get a sense of what he is thinking happens next," Key said.
"Last week he’s made a couple of comments which are slightly contradictory, so it’ll be interesting to see how that goes,” he said.
(Updates with comments on upcoming meeting with Bernanke.)