No justification for interest rate rise

If the trading bank economists have their way the economic recovery will stall, the Employers and Manufacturers Association says.

"There's no justification for the bank economists calling for an increase in the Official Cash Rate," said Kim Campbell, chief executive of the EMA.

"The economic fundamentals do not justify it.

"An interest rate rise is simply a wage rise for the banks keen on making up lost ground from their eroded banking spreads," Mr Campbell said.

"The bank economists are presuming this recovery is the same as others driven by inflation but in fact the money supply worldwide is at an all time record.

"With New Zealand leading the OECD economies in the global recovery our risk profile is at an all time low, hence borrowing costs are lower.

"The LVRs are working in the Auckland housing market so far, and there are no capacity constraints evident elsewhere on the supply side given that a large amount of the goods we consume is imported.

"Also the high dollar cross rate with Australia has shredded margins on the $10 billion value of goods we export across the Tasman.

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"There is simply no justification for an early increase in the OCR."

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