In order to honour his commitment to keep inflation in check, and due to the gross negligence of the current Government in failing to deliver large scale housing developments in Auckland and Christchurch, the Reserve Bank Governor today increased the OCR.
This rise will be welcomed by banks and possibly the National Party, but will snuff out the non-existent “recovery” and ensure the continuation of a society where the well-paid receive astronomical rises while the rest of us are grateful to still be employed.
In times of change, banks are traditionally quick to increase their floating loan rate but slower to raise the interest rates on their deposits, giving them temporary increased margins. Since most home owners will have fixed their mortgages a while ago, the National Party can maintain the illusion that we are doing well because a strong dollar prevents the reality of oil and imported consumer good price rises from hitting voters’ pockets.
Exporters, including dairy who are suffering from a massive recent drop in world commodity prices, will continue to have an unnecessary millstone around their necks. Workers will continue to have insecure jobs and offers of part-time or poverty wages should they be unfortunate enough to be restructured out.
While the rest of the world maintain and even lower their interest rates, we are alone in raising them. We do so because the Reserve Bank is obliged, by law, to ensure inflation does not rise above certain parameters.
The housing shortfall, which is the greatest contributor to this pressure, is caused by the Government’s steadfast refusal to promote wide scale building programmes: Even though this reneges on specific promises to the people of Christchurch.
Thus we are in Neo-liberal nirvana and a worker and unemployed person’s hell at the same time.
One of the first actions needed from a new Government, in September, is to give full employment an equal weighting as inflation for the Reserve Bank, to end this current cycle of economic self-destruction.
- Nick Wright
