Left’s jiggery pokery won’t work

I find it difficult to understand the headless chookery that’s going on about the very small increase in the official cash rate from a historically low level.

People with income from interest-bearing investments will be pleased and while the rest of us who are paying more for loans might not like it, we knew it was coming.

It was well signalled and anyone with the slightest bit of financial acumen would have known the odds of a rise were far greater than a fall or keeping the rate at its historic low of 2.5%.

In spite of this the opposition and some commentators are playing at Chicken Little, acting like the sky is falling and inevitably calling on the government to do something.

Well, the government is doing something.

Finance Minister Bill English told TVNZ’s Q+A programme that the Government is doing all it can to help households affected by interest rate rises:

“There isn’t some kind of magic solution her like jiggery-pokery with the Reserve Bank Act, or pretending prices are lower than they are, which is what the Greens and Labour are promising. It’s about the kind of diligent hard work we’ve all been doing, not just this government but households and businesses, becoming more productive, more careful with our spending, getting debt down, a bit less consumption, and good control of inflation. So we have the opportunity here for a sustained economic recovery, and if we work on keeping our costs down, increasing our productivity, we could have four or five years where there are more jobs and higher incomes, and that’s what helps households get on top of increases in interest rates.”

The government’s careful management and strict control on its spending are two reasons interest rates have been so low for so long.

The need to keep on that path is just as great now the economy is growing because a government splashing cash around would fuel inflation which in turn would put pressure on interest rates.

He said this week’s OCR increase is due to the relative strength of our economy

“The small increase in interest rates that was announced the other day is an indication of the relative strength of our economy. There’s a lot of economies around the world would like to see some signs that interest rates were reflecting the fact that the economy’s growing. The other job we have is to support households and businesses by doing everything a government can to reduce pressure on what are inevitably rising interest rates and we’re pretty clear about that where we can influence that pressure, it’s around the housing market where we spent two or three years working on improving supply to the housing market. It’s around the labour market where we’re doing our best to align our training systems and migration with the skills that are needed in a tight labour market. . . 

If there was a magic solution every country in the world would have employed it.

There isn’t – there’s the jiggery pokery the opposition are threatening us with which won’t work, or the careful management and restrained spending which the National-led government is doing that is working.

3 Responses to Left’s jiggery pokery won’t work

  1. Neil says:

    Our OCR increase of 0.25 is a declaration that we are through the GFC and heading ahead. Our currency is high,but an indication that money markets see NZ as one of the leading economies in the world.
    In 2008 interest rates were 10%, now they are 2.75%
    Remember we have many retired people with many dollars in the bank getting very little for it. They use their interest from savings to supplement retirement scheme and GSF.They will enjoy that little bit more.
    We have a lot of debt,a result of govt borrowing to maintain pensions and working for families. Any complaints by opposition parties over this is just humbug.If anything NZ should be proud that interest rates have moved up just slightly. If as I think they will, economic indicators look great for NZ.
    Far better than the potential for negative interest rates below zero percent. That is being talked about in Greece,Spain and Cyprus.
    Like so many countries we see mischief being made by Labour Parties and Green Parties. Their record on interest rates is not good.

  2. Gravedodger says:

    Of course thinking citizens expect those who work in the media to have a rudimentary understanding of basic economics when they comment.
    The truth is economic understanding in this country is in a word, woeful, expecting what passes for a “journalist” to be better informed is stupidity personified.

    We were farming on marginal Wairarapa hill country when the Hon Roger Douglas, facing possibly the most challenging economic times of this country since 1929, pulled the rug out from a cosseted primary production industry and before we could draw breath we faced a drastically reduced equity base and interest rates that were eye watering.
    Now I accept that most of those putting their opinion out there were not at school or were not even born but to describe a very small rise in the OCR rate as a hike is Goon Show and Monty Python in the extreme.

    Anybody who has recently borrowed for any reason to suddenly wail that their cost of borrowing is threatening their future should have been denied the loan on application.

  3. willdwan says:

    This is poor stuff. Jiggery pokery is one thing, but the blunt instrument bludgeon is another. Roger Kerr has a good article over at ‘Interest.co’ on inflation in the non-tradeable sector. It is time to lift the quality of debate on this topic.

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