The hiking of the official cash rate by 25 basis points to 2.75 percent is hasty and reckless and will hold back the economic recovery, the New Zealand Manufacturers and Exporters Association (NZMEA) said."We do not share the optimism from the Reserv
The hiking of the official cash rate by 25 basis points to 2.75 percent is hasty and reckless and will hold back the economic recovery, the New Zealand Manufacturers and Exporters Association (NZMEA) said.
"We do not share the optimism from the Reserve Bank of New Zealand (RBNZ) on the rate of recovery," NZMEA chief executive John Walley said.
The New Zealand dollar rose today in response to the hike and this could damage any re-balancing of the economy.
RBNZ governor Alan Bollard said on Radio New Zealand that the NZMEA was taking a short-term view.
"They would like to spend the next year seeing more consolidation. But the risk of that, of course, is that the year after that we start seeing quite a bit of inflation and I don't think they or their members would particularly like that.
"We've had a year of economic growth now," Dr Bollard said.
Monetary policy had been extraordinarily stimulatory, he said. It would build up inflationary pressures if the RBNZ did not act.
The Productive Economy Council said the rise was "plain stupid".
Spokesman Selwyn Pellett said the burden of controlling inflation needed to be spread wider than just on home owners. The council wants a compulsory superannuation scheme to promote saving.
