24 July 2003

Grant Gillon, Progressive spokesperson

Rate Cut Right Decision For Job Creation

Today's decision by the Reserve Bank to reduce the level of its Official Cash Rate is the right decision given the uncertain global economy and it is good news for further job creation, says Progressive Auckland Issues spokesperson, Grant Gillon.

"Today's interest rate cut, the third this year, is pro-jobs because it lowers firms' borrowing costs and leaves more financial scope for companies to take on more employees. It may also take some of the pressure off the recent appreciation in the New Zealand dollar which would be welcomed by exporting companies and their employees," Grant Gillon said.

The Progressives believe that only a society that is moving toward full employment is on the road to social justice.

Since the election of the centre-left coalition government late in 1999, around 132,000 jobs have been created in New Zealand and the country has one of the lowest unemployment rates in the developed world.

"It is good that we now have a central bank focused on New Zealand's broad social and economic interests instead of the terrible situation we had under National-led governments in the 1990s when the Reserve Bank aimed solely to deliver an arbitrary and very narrow zero-to-2% annual inflation rate each and every year," he added.

Grant Gillon said the rate cuts this year highlighted again the benefit of having New Zealand control over monetary decisions affecting the country, with decisions being made in response to our specific economic conditions and outlook.

New Zealand control of monetary policy would be lost if the country were ever to abandon its own currency in favour of adopting the Australian or U.S. currency, a policy proposed by some Opposition parties.

ENDS

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