Interest Rate Rise Won’t Help Small Businesses

Interest Rate Rise Won’t Help Small-Medium Business Growth

Today’s Reserve Bank announcement lifting the Official Cash Rate ()CR) to 2.75% will make an already cautious business community even more wary, said Michael Barnett, Auckland Chamber of Commerce CEO.

He urged the Reserve Bank to not use today’s 25 point lift in the OCR as the start of a trend of further hikes as it seems to be suggesting in its announcement.

“The fact is that many businesses are still hurting from the global financial crisis, and the environment hasn’t been improved by the high dollar rate against the United States and expected lift in GST and energy and other price rises being foreshadowed by the introduction of the ETS next month.

“We are far from being out of the woods to getting back on a sustainable growth path,” said Mr Barnett.

“Despite what the Reserve Bank and some other commentators are saying about the improving economy, many of my members are reporting that things are still pretty flat, and they are yet to see confidence converted into profits and stronger balance sheets.”

He agreed that businesses should not get spooked by the continuing uncertainty over EU sovereign debt issues, jittery stock market in US, and the high dollar exporters are facing in trading to the world.

“The warning that the Reserve Bank made today indicating further interest rate hikes are likely in the months ahead is not a message businesses still working hard at surviving – let alone growing – wanted to hear,” concluded Mr Barnett.

ENDS

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