Election 2014 fact-checker: Data belies Labour claims of an exchange rate-driven consumption boom

Two Labour aligned commentators have been claiming in recent weeks that the high New Zealand dollar is leading to a consumer spending surge as people take advantage of cheaper imports.

They are wrong.

BERL economist Ganesh Nana claimed on television in the wake of the Reserve Bank’s decision to lift the official cash rate it would mean a higher exchange rate and “we are rewarding consumers…. investing in new equipment and machinery or in jobs and new markets, that’s what we’re cutting off at the knees.”

That is not true on both counts.


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