Rates rise will hurt investment: EMA

Today's interest rate rise of 0.25 per cent is entirely predictable given the Reserve Bank's record and the cost impact of government policies on new investment and sustainable growth, the Employers & Manufacturers Association (Northern) says.

"The Reserve Bank operates from an unnecessarily high interest rate plateau," said Alasdair Thompson, EMA's chief executive.

"Its single objective to control inflation could be achieved from a generally lower monetary policy threshold overall.

"In taking its ultra cautious path for the past 10 years, the Bank has found the move down to more investment friendly interest levels too difficult.

"The Banks' conservatism has been underpinned by extra central and local government taxes and compliance costs hitting business, particularly for fuel, electricity, OH&S, hazardous substances and the RMA.

"These factors are contributing to a complacency that the economy is performing better than is justified.

"We share the Bank's deep concern about the inadequacy of investment formation to grow our economic capacity without inflation.

"It is critical now that government policy focuses primarily on achieving growth."
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