Newland: Best option? Do nothing
Today’s official cash rate announcement included the clearest signal yet that house price inflation, and the household credit growth that goes along with it, is squarely in the Reserve Bank’s sights.
The Green Party has called for the OCR to be raised to lower the dollar and help exporters. Others have said Wheeler has indicated he’s likely to raise the rate sooner than expected to curb house price growth.
But Newland said: “Every time anyone meddles with the market there are unintended consequences.”
He said if the OCR was lower, imports would become more expensive and there would be inflation. Increasing the OCR would make exports even more difficult.
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