KEY POINTS:
Finance Minister Michael Cullen supports the Reserve Bank's focus on fighting inflation, despite the impact high interest rates and the strong currency are having on exporters.
But he repeated the need for the bank to have other tools to contain inflation if the export sector were to avoid a disproportionate amount of pain.
"The Reserve Bank has ongoing concerns about persistent inflation at or near the top of the 3 per cent band, and ... a limited set of fairly blunt tools with which to keep inflation in check.
"The exporting sector has been called on to take too much of the strain of macro-economic management by way of monetary policy."
Parliament's finance select committee is looking into the monetary policy framework.
Although international prices were near record highs for forestry products, and strong Asian demand offset softer markets elsewhere, the high New Zealand dollar was eating into potentially healthy profit margins, Cullen said.
"The strength of our currency has been driven by the weakening of the American dollar and the global increase in commodity prices, but it is true that higher interest rates here at home are playing their part as well."
He said the kiwi was likely to stay strong for some time against the greenback.
- NZPA
