NZCTU Te Kauae Kaimahi Economist Craig Renney said the decision by the Reserve Bank to cut the official cash rate by 50 basis points (0.5%) to 4.75% will be a welcome relief to workers facing higher unemployment and a struggling economy. “The Reserve Bank has been forced into a significant cut because the economy has failed to fire. Weak consumer spending, weak business investment, weak house prices, and a weakening labour market all put our economic recovery at risk.”
“The Government is expecting the Reserve Bank to do all the work and support economic growth. Rather than supporting the economy and working people through difficult times, this Government has chosen to cut spending and investment, and is happy to see unemployment rise to levels not seen for a long time. These are choices, and the Government could invest now to deliver the growth we need for the future. Simply cutting interest rates returns to the economy of the past – and all the problems it already had”.
“While many people will welcome lower interest rates, and some retailers will welcome the potential for additional spending, the rate cut is not a sign of strength in the economy but is a recognition of its weakness. We need to build a better economy, one with good work and higher incomes. Nothing in the government’s plan for cuts delivers that.” Renney said.
