Thursday, January 29, 2009

The OCR madness

I concur with Blair Mulholland.

But the question I have is this: if Bollard was such a bold central banker (considering that bold central bankers are about as common as women in the All Blacks) why did he stuff around with 25 point rises for two years when inflation was rampant and the property market was out of control?

Answer: because he is a drab, conservative central banker.



Based on what I have seen in Britain, much relies on confidence.
Large cuts in interest rates are scaring people as well as causing havoc with savers, particulalrly the old folk.
Such savage cuts in interest rates to 2-3% make brits feel the economy is deeply in the shit, so they don't wish to spend.
It is probably scaring banks too, who are increasingly reluctant to lend.
Such low interest rates hardly encourage savings, so where will the banks get their funds from?
National needs to be careful. Too much activiity can undermine confidence. This is what ios happening in the UK.
Gordon brown is accused of running around like a headless chicken. He is rushing with poor polcy decisions which have no impact like the VAT/GST reduction.
Thank God new Zealand has no car industry to bail out!

Anonymous said...

Thank God new Zealand has no car industry to bail out!

No. We've got Fonterra to bail out. And we will.

as milk prices even fall faster than our dollar
the entire country is basically crashing towards bankruptcy - and almost noone seems to care.

whack up interest rates and we'd probably be there now.