KEY POINTS:
Here is an earlier selection of Your Views:
NeillR
Those who are clamouring for the rates to be dropped are missing the point. As the dollar increases in value, overseas investors are subject to increased exchange rate risk and a lower overall return on their investment. Couple this with the hoped for decrease in domestic borrowing and the Governor may finally be able to draw some comfort that the sting is coming out of domestic inflation. But not necessarily - given that the Government continues to turn a blind eye to inflationary pressures, many of which are of their making, there is every chance that we have to endure more pain yet. The big question is whether Clark and Cullen have learnt their lesson?
John Heskett
The definition of futility:Doing the same the over and over again and expecting a different result.And we pay him as well!
Frank
Whinge whinge whinge, blame blame blame - whether it's rugby, yachting or the economy....kiwis just love whinging & trying to blame someone. In the last 10 years NZ'ers have become net 'over-spenders' by 14 per cent of their average incomes. Can someone please tell me how this is now Mr Bollards fault? Is it Mr Bollard making the average Joe Bloggs spend $1.14 of every dollar he earns? No, I actually recall him warning kiwis at every opportunity - to tighten their belts & start saving. Then what happens when the next retail spending data is released - more increases in consumer spending! It's time for you lot to take some personal accountability in this mess & stop making Mr Bollard the sacrificial lamb for all your personal gluttony. His mandate is to keep a lid on inflation - which is what he is desperately trying to do & you will thank him for it in years to come when we are living in an environment of minimal inflation. Inflation is an evil beast & once that genie is out of the bottle it is extremely hard to put the lid back on. So why don't you all give Mr Bollard - and ultimately yourselves - a helping hand & put the credit card away & live within your means for a while!
Steve (AKL)
Quite an unsophisticated yet effective a bloke he will be proven, Mr. Bollard. He must be the only person with any guts in this country brave enough to tell both the useless government and their useless opposition as well as the self-deluded general folk that enough is enough - the country, as a whole, has been spending too much for too long. If neither the kiwi consumer, investment house-buyer, the government, or the average overseas investor are willing to change their behaviour, the Reserve bank sure can help them make the decisions. All of the above will hopefully go down the drain this time around. The open homes are almost deserted. I only wish he did this a year or two ago before they all went absolutely mad. Yes - I too am New Zealander - with a rising bank balance, few other assets and no debt at all. Hope the others join us before it's too late. An old Glenfield house costing half a million? Come on whinging Herald readers, you knew this has had to come down burning sooner or later; it will be a bit faster and therefore milder this way. Absolute shame so many honest hardworking exporters will get caught out in the open, though.
Zazu (Auckland)
I think all the interest rate rises are rather short sighted. Whilst to the economic purists and academia this might seem to be the right thing to do, longer term the bloke in the street with a mortgage is going to feel the pinch. I am sure we will see a rise in mortgage sales and all the social drama that goes with that. And if you live in Auckland, Councils and Govt tax us with impunity with high rates, high water rates, high dog registration, exorbitant parking fees and the list goes on. There will be a policical backlash come next election.
Andrew Jones
When are you going to wake up to the new world - global hedge funds, Uridashi, International currency traders and boy to they love silly old NZ. Thanks to you our rates are now 2.5-2.75 per cent above Australia, where would you go for a quick and easy buck? It's been a simple 5 yr trend Alan, clearly you hadn't noticed, you put up rates up goes the exchange rate = more grinding pain for the majority of NZers - workers, business owners, exporters, farmers, actually everyone except those cashed up - just brilliant. Oh and housing, it might be becoming overvalued, so what, it's the same for all if it comes down. You want to be an idiot and buy an overpriced dog, then pay the price for stupidity. New Zealand the only developed country without a tax on property and just now thinking about superannuation - well hello! I'm very sick of the lack of vision and the self interest of people in power in this little country and the harm you do - that includes you Michael.
Paul (Auckland)
I'm on the fence with his decision. I think he should forget about the housing market and leave that to the govt. What about govt steps in and introduce capital gains tax, or some tax relieve for your primary home owners. Thus hitting the actual "criminals" of the housing market The investors. They are the reason for the boom in the market and that is the only way to peg it back.
J Gee
Not an original thought in his head! Why not reduce to 6 per cent and add a tax of 3 per cent to the base rate exporters could reclaim. At least think of a new approach!
Christchurch
The decision to raise the cash rate is a crazy policy.The decision will only serve to make the NZ dollar more attractive to the wider world and drive the value of the dollar even higher.It is time for the Government to intervene.
David Yates
It seems to me that Bollard had no choice this morning but to raise interest rates - and not necessarily because of economic indicators; failure to raise the rates would have indicated a bowing to government pressure brought on by Michael Cullen's comments last week. Raising the rate today, despite the obvious economic implications, was a demonstration of RB independence. Any other stance by Bollard would have weakened the bank's credibility.
AK
Great news. Good for National. Damn sure Labour is out next elections. On one hand, so called people focussed Labour Govt. wants all the Kiwis to own their home, on the other hand, such rate hikes are keeping common Nzers miles away from owning their first homes. On one hand schemes like KiwiSaver push people into savings, while on the other hand, increase in petrol taxes, rate hikes, increase in commodity prices, no personal tax rebates etc....is just not doing any justice to common Nzers. Dont think that only the home owners will get burned by such rate hikes; even the people renting will get a taste of rent hikes sooner than later as the landlords wont have any options but to pass it on.I can remember my flight to Singapore last December. I had Winston Peters travelling on the same flight on Singapore Airlines in a Business Class. I can afford this Biz Class out of my own pockets, but I doubt Winston would have paid it from his own packet. Govt. should look into cutting their own expenses and surely like this one where ministers get to travel biz class when common Nzers are suffering.Time to wake up and time for a change in govt.
Tom Hackney
What agenda has Mr Bollard got? He must know the interest raises are not working to lower the NZ Dollar, it's raising it. Almost everyone who is actually doing things for NZ is hurting now. Only those creaming the interest profits from housing speculation and imports are laughing all the way to the bank. These people are not helping NZ in a long term way. I have been a Labour voter all my time in NZ until now. Both Labour and Mr Bollard's advisors have to go.
Hugh (Hamilton)
Well done mate!
Alistair
The issue has never been the actions of Dr bollard, but more the way New Zealanders are acting, if we had the moral responsibility placed on us of not over spending then there would be no problem and the dollar would remain lower. It doesn't help that the media is hyping the issue by looking at the fact that the dollar is climbing heavily against the greenback yet the gains are less against other more stable currencies.
Catherine Thomsen
We are currently trying to build our first house and the we have been on a floating rate until we finish borrowing. The interest rates are crippling us and I am due to go on maternity leave. Bollard's reasoning that this will ease borrowing is just punishing those who already have a mortgage. Justifying with the tight labour market is ridiculous too. The baby boomers will all be retiring soon and we are expecting to support them with the interest rates as well is unrealistic. The labour market is tight as a result of the baby boomers about to retire and not enough skilled workers - not from a booming economy. He might care to read Helen Clark's husbands report that in real terms Kiwis are no better off in terms of wages then they were 20 years ago. It seems a case of - the country is doing well so lets punish them.
FH (Auckland)
It is becoming more and more obvious that Bollard has no idea about the New Zealand economy and what is happening in the real world. He seems focused that house buying is the problem but what he hasn't managed to figure out that its foreign investors that are causing these problems. Why has the government not implemented changes to residential property purchasing in NZ? If rules were changed so that only NZ residents can purchase residential property it would have a huge impact on spending and the economy. Its all Asian buyers with endless supplies of money that is pushing our housing market through the roof. I think Labour has just shot themselves in the foot for the next election... I certainly wont be voting for them. The have made yet another mess for National to try and clean up. Bollard needs get some advise from someone as its clear he doesn't know what the hell he is doing to our economy. He should try listening to talkback and see what's going on in the real world!
Elc
Bollard lost control, he should cut the rate not increase the rate. NZ dollar will send the country into recession. How you could do business like this high interest rate and high dollar ,I know to many business people they will close down ,Bollard punished the exporters for Government and him fail to manage the economy and we will suffer.
Export Company Director
Another nail in New Zealands economic coffin. Helen Clark says exporters will just have to get used to it - but this will just force more exporters and export manufacturers out of New Zealand, and cause more tourists to look for somewhere cheaper for their holidays.The logical move was to lower the OCR to 5 per cent which would cause the carry money to leave, taking away the liquidity in the banks, and tightening the economy making mortgage money harder to obtain for speculators.The productive sector could regroup and become profitable again allowing the countries economy to get back on track.This OCR raise will just cause a much harder landing than was necessary.
Simon
Bollard will soon be the only person left in NZ , then he will have inflation under control , entirely his control, he'll be a lonely sad old man living in a cave.
With , if he's lucky Helen and Michael as neighbours in the next cave.
David
It is a great pity that Bollard's timid approach in not hiking earlier and more aggressively sees NZ in this position. A king hit at the beginning of 2007 would probably have seen the rate start to fall by now.His predictability is also a handicap and allows more certainty to profits for the international players.
Carl Forster
This exchange rate fiasco can be laid at the Government' door.This government floated the NZ$ against all advice at the time.And now like Nero are still sitting on their hands and fiddling.Put the NZ$ interest rate at 5 per cent and all will come into line.Our problem is that overseas investors can purchase at 1 per cent to 5 per cent then invest the money in NZ at 8 per cent +. Time to go Labour.
Ian Morine
The stupid mindless "right-wing" obsession in NZ with inflation (the Reserve Bank Act), as reinforced by Don Brash and colleagues on TV1's Agenda programme last Saturday morning - an obsession also driven by bank economists that are paid by the banks, who benefit most. Let us not forget, they are the same economists that predicted a house price crash years ago, which still hasn't happened ! I think these people are more concerned about how our economic reforms of the 1980's are perceived overseas, than NZ's economic future in the medium to long term.Absolutely crazy "killing the goose that laid the golden egg" - exporters!
Graham Medcalf
"The higher OCR now gives strong incentives to New Zealanders to save," said Bollard today. What world does he live in? New Zealanders are battling to service debt and now mortgage rates will go up again. Bollard's actions will mean Kiwis have less disposable income to save, not more. As Henry II said in 1170, "Who will rid me of this meddlesome priest?"Exporters, manufacturers and homeowners will all suffer as Bollard doles out our money to the hedge fund managers, the currency traders and Japanese housewives. Watch the dollar go even higher as the rest of us suffer.
J Kemp
He should be fired immediately & sent back to economics school - in Australia. NZ is a quagmire of decades of economic & regulatory mis-management & the worst 1st world country in which to live.
Peter Milne
How hopeless this decision is cant he see that more overseas money will pour in to NZ as a result of this and continue the rise of the NZ dollar against the US currency
Daz (uckland)
Great time to buy big ticket items. If you can't afford a house that is , maybe a 60 inch plasma, an international holiday or a sporty new car. Swings and round abouts. I guess these are no consolation if your exporting job goes down the swanny. Maybe unemployment will soak up the governments surpluses and prove anti inflationary.
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