KEY POINTS:
Here is an earlier selection of Your Views:
Daniel James
Wake up to some economic sense New Zealand - there needs to be a robust outlook when thinking economics, commerce, trade. New Zealanders have blinds on their eyes when they think and look for business/economic growth. Look beyond the obvious!
Grant
Bollard is a genius. It is obvious that he is driving up the exchange rate so Cullen can use the surpluses he has stashed away (somewhere) to pay off the entire national debt in one fell swoop. Then the exchange rate can be allowed to drop 40 per cent to its realistic level; and NZ has made a killing!
Bunyip Auckland
Australia has more control over inflation as around 80 per cent of people there are on floating rate mortgages. Which is the reverse here. Where the Reserve bank of Australia if they where to raise interest rates it would have immediate effect. You will find that the interest rate has little affect on home owners already on a fixed term rate. It only affects mortgages that are due for renewal.The raise only affects business and exports. I think its time i move back home to Australia where its cheaper to buy a house, get a decent paying job and pay less tax!
Jon
Some say that doing the same thing and expecting a different result is a form of madness. No point blaming Govt spending on roads and health spending. If we didn't have the expenditure and had tax cuts instead experience says that NZ'ers would just spent the tax cuts.Going to Australia is great if you don't mind even longer drives to work, or time on public transport, water restrictions, forest fires and the Aussie jokes about sheep and NZ'ers!New Zealand needs to invest in sectors where we can raise productivity. Those companies "exporting" manufacturing jobs are doing just that, using NZ$'s to bring wealth back into the country.Perhaps we are destined to have a higher exchange rate, after all that will drag us up the OECD ratings which everyone seems to want. The challenge is to raise the exchange rate without increasing interest rates.Kiwisaver will take money away from consumer spending which is good.Perhaps once Kiwisaver kicks in Bollard should reduce interest rates and see what happens to consumer spending, house prices and the exchange rate. You never know, that might be the master plan!
Dean
I am glad the Reserve Bank has independence so that politicians can't tinker with it. NZ was the first country in the world to have govt legislation enacted to stop politicians trying to interfere and influence economic policy. Many other countries have followed NZ along with our inflation target bands. Bollard is to be congratulated that he mustn't kowtow to any political lobby group. Using his discretion he has to curb inflationary expectations. I am glad that he also has vision and can look ahead with the statistics that has to guide him with making policy decisions. Dairy, consumer spending, household prices and govt spending have forced to do the obvious and hike rates.
Mr. No-body
Just wanted to say - thanks Mr Bollucks! As a young homeowner, who after years of saving to invest in a 1st home, find myself looking up to you with great pride. I know find myself paying a substantial extra amount on my mortgage - which is rad!
Susan O'Neill
Can anyone tell me why our interest rates keep needing to rise, do all other countries use this as a means of keeping down inflation? Why is that in Australia they can give tax cuts, good wage rises etc and still keep mortgage rates down.
Dr Cullen is determined to bring every working New Zealander to their knees. Labour campaigned on vote for us or your interest rates will rise, well they have risen and the cost of living has risen for everyone, usually things out of the ordinary working person's control i.e. oil price rises (pushing through to the price on the shelves), government spending (though not for tax cuts), rampant house prices (due to massive immigration) yet it is the poor worker who suffers, enough, it is time to stop pushing ordinary people to the brink of disaster, I can't wait for the next election, what pile of rubbish with Helen and Co come up with to make us vote for them - surely they don't think we will forget all the pain and absolutely no gain that this greedy, grasping government has inflicted on us.
Moe (Australia)
Does not worry me. I moved to Australia 18 months ago. Come over here for a standard of living that is much more superior to that which you have in NZ under a Labour government. Over here if you work hard, you actually benefit from it.
Jin
What is the point of another raise? What is wrong with growth? Bollard is killing NZ economy. Also, it is killing foreign students like me, who bring money from overseas to live here. Within a year, it's become 25 per cent more expensive to study and live here. So now my family are living like beggars, squeezing every corner of our budget. We cannot afford to live like this any more. So it's time to start packing.
Tim
There's a surprise, another government stooge proves once and for all he has no idea what he's doing.
Wayne Bradshaw
Rather than blame housing and dairy prices perhaps Mr Bollard should tell Mr Cullen the damage that his govt spending is doing and the impact that this is having on the OCR and the economy as a whole.
Le Fox
When will Clark, Cullen & Bollard understand, with all these huge taxes & increases, people on $100,00 p.a will not be able to pay their electricity bills.So, how many more people do they wish to bump off with their disastrous financial packages?
Scott
Allowing the Reserve Bank to limit inflation with only one tool is like an army going to war with only one type of weapon. Now, we see the real problem. We need to slow the housing market down by increasing the cash rate but fixed rate mortgages delay this impact by 3 years and all the time having the highest interest rate in the western world means we have over $55 billion invested in our banks just to get the interest! All this money drives up our currency, kills off NZ's ability to make money (exporting) and in 3 years time we're all going to suffer. On top of this the Labour government takes all the credit for the low unemployment rate when really it's just been due to the amount of money floating around (nothing to do with Cullens fiscal policy) and when National is in power and the economy goes into recession (which is about all it can do with our deficit of payments) they'll blame that on them too. Nice. Maybe if NZ'rs were encouraged to invest outside of the country we could limit this effect but Labour have discouraged that too with capital gains tax.
Tony (Auckland)
The latest interest rate rise would have to be one of the most irresponsible and contemptuous actions we have seen from a Reserve Bank official.At a time when many in the export sector are struggling, the Reserve Bank seems determined to make the economic conditions even tougher for them. Will Bollard and his advisors only be satisfied when this country's export sector is completely destroyed? To use the rise in dairy prices as a partial justification for putting up interest rates is absurd we should be celebrating the success of this industry not punishing it (and by default other exporters). I find it particularly galling that the so called Minster of Finance (Dr. Cullen) was actually singing the Reserve Bank Governors' praises two weeks ago. I for one would like to challenge Dr Bollard and his team to get out of their ivory tower and take a look at the 'real world' the reality that the average New Zealander / New Zealand company is facing. The same challenge should also be issued to the current Labour Government, which quite frankly is devoid of any meaningful contribution to the economic growth of this country.
Andrew
Enough is enough - I am off to Australia!
Andy
So Bollard is worried about people over spending. So what does he do? Raises interest rates, the exchange rate climbs even further and goods get even cheaper the buy, so people buy even more! Meanwhile, overseas investors reap the benefits of high returns on investing in New Zealand and even more money flows out of New Zealand, eventually bleeding the country dry of assets.
Russell
Well done Dr Bollard, once again you penalise the local economy so overseas investors can in the long term extract more value out of this country. You also do nothing to stop the true causes of inflation - our idiot government and the mortgage free sector spend up, which will gain more momentum as imports become cheaper thanks to our over inflated dollar.
McV
I do feel sorry for Bollard. The reality is that he is powerless against the biggest cause of inflation - Govt Spending.
Karl Rohde
Oh, people are complaining again? Poor middle New Zealand's spending has been crimped again? Put simply, Bollard has a blunt weapon to use, and has very well defined targets. He has little choice. Stop spending so much money. You don't need the new TV, or the new lounge suit. You don't need to buy that next luxury on the credit card. Basically, stop living on credit. Then we will see monetary policy easing a bit.
skpp
In nutshell we are living in a fool's paradise. Power/ Water/ Housing /Living cost everything has gone up.Conclusion: time to move out.
Wanganui
Once again it is those property owners with mortgages that are carrying the can for inflation. Nothing is being done to curb consumer-spending on TVs, white goods, motor cars, overseas trips, etc where often there are interest-free or delayed payment plans seducing people to spend, spend, spend. This is a very narrow-focussed strategy to curb inflation. The wider consumer-spending mentality needs to be addressed not just the easy way out of interest rates directed at mortgage holders. There are many high-spending consumers who don't have mortgages and unaffected by high interest rates but fuel the inflation fire. It would seem the RB is in panic mode.
Well done Mr. Bollard
Keep it up Mr Bollard and keep him backing Mr Cullen so that I (and many New Zealanders in similar situation) will have a good reason to move across the Tasman. I am sure Mr. Bollard will secure the gold medal if there was a worst RB governor award.
Home-owner Auckland
Well looks like it has become his habit now. Hey such rising rates are doing no good but dividing the NZ society in terms of rich against poor. On one hand our so called Family inclined Labour govt. wants common Nzers to own their homes and on the other hand moves by our respected Mr. Bollard keeps them miles away from their dreams. Such moves wont affect the rich segment as such(Wouldn't affect me for sure. I would still be on my home buying spree) but would certainly crash the dreams of the would be first home buyers. Its high time for a change in govt. and hope Mr. Bollard retires soon just because his actions are dividing our society!
Les (Auckland)
Thanks Dr Cullen, you've made my decision as to where my vote will go next time round that much easier! Out you go Helen & Co!
Steve
What's the point of writing / complaining? Bollard (and his cheerleader Cullen) are now so far disconnected from the daily reality of most of us that he does not understand that the biggest inflationary pressure on our micro economies is Interest rate increases. Also, the windfall for Fonterra, cited as an inflationary pressure, will have bugger all to do with most of our incomes or spending. It is interest rates that will force me to increase my charge out rates, not the desire for another car, TV or junk from the warehouse. Please Mr Key, some sense from you?
Aaron (Pukekohe)
Job well done Dr Bollard. Once again punish Mum & Dad homeowners who have absolutely no control of what we spend on the basics. Fuel, groceries, power and now mortgages keep going up. You are squeezing us to bankruptcy. I fear for my families house when our fixed term comes up for review next year.
Barry
Wow!Unbelieveable! What is he trying to do? The economy is not going too good and inflation is already below 3 per cent. Exchange rate is so high that our manufacturers are moving overseas and jobs are being lost. Does he want to be known as the first governor to destroy our economy? I foresee a really hard landing and families are going to suffer because of one man. The current government should review his job description or to the next elected government.
David (Taupo)
The Reserve Bank has a very narrow view of the causes of inflation. This is seriously damaging NZ's economy. Higher interest rates at the same time as making our exporters less competitive are also making imports cheaper therefore encouraging consumers to spend more. Interest rates are a very blunt instrument that only slowly affects the majority of borrowers who will only be affected when they have to refix their interest rates in the mean time they will be buying more cheap imports. Bollard barely gets a pass mark for his time at the Reserve Bank, he is out of his depth.
Taupiri
Bollard has just ensured that Helen Clark, Michael Cullen and Co will be turfed out at the next election.
Stretched (Auckland)
What! Another interest rate rise... what for? Perhaps the Government should keep their purses closed for a start. Here they are pushing KiwiSaver on to us... there's no way I am going to be able to afford to do KiwiSaver and pay increased interest costs on my mortgage... it's one or the other and the Government has pushed me away from KiwiSaver as I simply can't afford it. When is it going to end?
Alwin
Once again the homeowner is being punished for government spending. All this is going to do is bring more money from overseas into our country, raise the dollar value and kill exports. Bring on the election, I have had enough. As someone has previously stated. A Kiwis next tax break is only two hours away by plane.
SD (Auckland)
Looks like another reason for moving to Australia. Its getting impossible in NZ to get ahead, low wages, high interest rates and also the government policies are going to start driving both investment and people elsewhere. We're planning on packing up the family and moving to Australia!
Leonard Lee
The Reserve bank continues to strangle our exporters. Imported goods will get cheaper as our exchange rate skyrockets - spending will only increase. It'll be too late to reverse the damage once a recession hits.
Margot
Essentially this is a tax. This government just can't leave market forces alone. Can't wait for the next election.
Tony
Mr.Allan Bollard should resign and start looking for another type of work. Any student of economics will probably do a much better job-only to rely on OCR -a very blunt instrument. Any competent surgeon will tell you it's stupid,crazy out of your mind to use 'blunt instruments'-period. As we all know crash diets do not work. Remember the 90's when 'Dr.Maggo' tried to do the same-same medicine- house prices still went up. Anyone who listen to the Dr.then would have to pay more in 2000's.We are surely paying too much to these treasury people for an inefficient work. Sack the lot..What about performance base salary/wage. Don't give up folks-here is the good part.Should we win the America's Cut and the Rugby World Cup then nothing matters anymore.We will be "heaven" on top of the world..We will rock you.Ha ha.That's life mate.
JT
Once again we are beaten into submission by Bollards blunt instrument. Yes dairy prices are up significantly, but what about the rest of the struggling export businesses where prices are not up. This is running a serious risk of simply shutting these businesses down. Don't even mention property prices, that horse has long bolted so let the market play itself out. If you want to target property specifically then do it, but don't do it with with the OCR.