Official Cash Rate Shows Complacency

Today’s announcement that the Official Cash Rate (OCR) will be left unchanged at 1.75 per cent maintains the tone of complacency on New Zealand’s economic outlook.

“Beneath the veneer of stability large risks are lurking in the global economy,” says New Zealand First Leader Rt Hon Winston Peters.

“The prolonged era of ultra-cheap money has created expectations that this unprecedented period will continue forever.

“Fed by cheap money, share and property markets are at record levels and have a long way to fall.  In particular, the US share market has had an amazing run with barely a hiccup. In China, debt levels are staggering.

“Irrational exuberance rules.

“It is impossible to predict when, but something will go wrong and New Zealand should be prepared,” says Mr Peters.