Manufacturers and exporters welcome the decision by the Reserve Bank of New Zealand (RBNZ) this morning to cut the OCR to 2.25%, say the New Zealand Manufacturers and Exporters Association (NZMEA).

NZMEA Chief Executive Dieter Adam says, “We are pleased to see the RBNZ reduce the OCR today – the effect on the currency will help maintain the relative competitiveness of our manufacturers and exporters in offshore markets and those competing with imports domestically.

“The surprise of the decision helped to move the currency down further than we have seen in other recent OCR cuts – the currency has dropped by over a cent already on a trade weighted basis. We are hopeful this drop will be sustained, however, even if it does our dollar will still be well above what the RBNZ itself would consider appropriate.

“We also support the RBNZ’s comments that further easing may be necessary, and we would encourage them to follow through on this in the next OCR decision if conditions allow, while keeping their careful eye on any building imbalances or financial stability risks.

“The currency has remained stubbornly high, despite continued downward pressure on commodity prices.  The RBNZ noted in their release that the exchange rate is over 4% higher than their December projections – 4% may sound small, but it is significant in terms of its effect on manufacturers margins and ability to be globally competitive – this drives manufacturers ability to re-invest in their businesses for future growth and innovation

“Manufacturers welcome any changes that will help move the currency on its downward re-balancing trend towards a level playing field for them in export markets.  On that note, we are concerned about reports that there is penned-up demand from off-shore investors to get back into the Auckland property market. The last thing we need is the RBNZ having its hands tied by yet more pressure on the Auckland housing market.” says Dieter.
For further comment contact Dieter Adam, 027 495 3276.