KEY POINTS:
Here is an earlier selection of Your Views:
Simeon
I have not yet hear Dr Bollard tell the government to stop spending money, it is always the consumers then it was the property investors now he blames the dairy industry. So now it is OK for some millionaires from Asia to bring in all their money to invest without even having to learn the language of NZ, but it is not OK for us to invest in property because it puts to much pressure on inflation. Get real Bollard, Overseas investors will push up inflation as well, in fact the reason we have a very high dollar at the moment is because of the speculation of interest rate rises. I don't think he knows his own Job. Bring back Brash!
pCb (Auckland)
Sir Roger is right. What Alan Bollard needs is not a blunt weapon but something that brings down the individual problem rather than the entire economy but that will never happen with a Government too busy tinkering rather than getting on with something useful. Obviously we are in 22nd place and falling.
Irena Dahlstrom
This is a bad move. I work with quite a low socio-economic group of people, and this can only hurt them further. Most Kiwis want to own their own home. Higher interest rates, just makes it even more unattainable. Presently it is a struggle for poorer families to make ends meet, and higher interest rates just makes it worse for people on fixed incomes. Bollard has not got a clue about ordinary folk. It is high time for him to resign. It is also time for Labour to depart, their foolish monetary policies are what is pushing up inflation.
Mathew King
Interest rate hikes may have slowed down spending in the days when buying a house was more achievable and the economy was less developed. The issue, as we are told, is high spending.I have recently purchased my first house, on my own in Auckland. The repayments are extreme and I can assure you I am not spending a cent that is not out of pure need. This is a big commitment that I am prepared to take as I value living in Auckland and having a place to start a family and live the Kiwi lifestyle (yes I have a backyard) Increasing interest rates does 2 things, 1. People will now have to save more money to raise a deposit, if they cannot find a house at a reasonable price, they may hold off "How about we buy a 50' plasma as a treat for us saving" = Spending. 2. People that are in the game, like me, that have gone out on a limb, could be pushed out of home ownership though mortgage increases(is that what the government wants?) Having a mortgage whilst is not regarded as a saving plan, is actually forced saving and reduced spending, is this not what we want? Bring on a new, more modern approach, I'm definitely not the economist but someone must be.
elc
There is no single reason for today increase ,just what RBNZ will damage the economy by higher interest rate and overvalue New Zealand dollar. Tthey should do something to stop kiwi dollar from moving higher , today 22 years high ,they killing NZ economy for Mr Big.
chantelle
This is exactly the sort of thing, which is pushing working New Zealanders overseas. It is just not worth staying in New Zealand to work anymore, there is no incentive. It would seem that now days you are just better off to have babies and stay on a government financial system than to educate yourself to go and finance ourselves. Really disappointing.
Sin Ic
Sadly Mr Bollard has the imagination of a 1950's state housing architect. Mercifully in fifty years time we can hope that his granite tombstone will be lost amongst the marbled remains of a younger generation that had recognised that economic well being was the result of innovation, rather than a relentless whipping up of interest rates.
Fantastic
Allan Bollard is a twit! I'm 29 years old, worked like a dog for two years with two jobs saving for a deposit on a house in Auckland, purchased in February of this year and are getting squeezed further every time "fat cat" puts the rates up! Tax this, secondary tax that, user pays and interest rates up...One starts to wonder why I ever bothered coming back to NZ! While you're at it why don't you have a chat to the Immigration Minister who is going to let all the other "fat cats" in with their new "$20 million" and you're in residency deal - I'm sure that will help your cause to put the rates up even further when they start buying up property!
Bruce (The Mount)
The hypocrisy of Andrew Little amazes me. The unions have forced the minimum wage up over 21 per cent in 13 months thus pushing up all wages and putting more spending power in the hands of people who will do just that - spend. So spending is up because the 'now' generation don't know how to budget and save and hence the interest rates go up. The unions should realise that when they point the finger at someone, the other three fingers are pointing back at themselves.
Richard Purvis
Alan Bollard's failed attempts to curb the housing market by pushing the OCR upwards are driving us towards a dangerous decline in viability in the export market by artificially raising the value of the NZ dollar. I find it hard to believe that he cannot see that there will be investors on the world market who would send their cash into an economy deriving 8 per cent interest rather than take risky investments in their own market for similar or lower gains.Closing markets to NZ exporters is already seeing job losses, which will lower the amount of cash available domestically (is this his real aim?), and which harms the viability of many long standing New Zealand companies.Raising the OCR is not going to change housing prices in the short term as many NZ investors and home owners are protected by fixed interest loans. This will hurt the people who are currently renting and wanting to get into property ownership by raising the cost a new mortgage - this in turn drives investment in the rental property market, so his measures are simply driving more folks into the arms of landlords! Bollard's policy simply increases the divide between wealthy immigrants and poor NZers.
Leo (Auckland)
Absolutely unbelievable! Both the Reserve Bank and successive governments have been restricting my ability to make financial progress now for many years by increasing their own income and restricting mine. And they blame us for not being able to save!! Today, finally, I intend to begin initiatives to move away of this dead-end country.
Lee (Waitakere)
I saw how hard the Labour Party and the union movement worked together to influence a Labour victory at the last election, and now all those workers votes are really starting to count! A bit rich for a union now to be criticising monetary policy - why couldn't they figure this one out before the last election? As for all those workers who voted for this situation, when will you realise that 'the working class' has been left stranded, and stop the rot?
Chris
The school curriculum should include studies on Australian life and culture to prepare young New Zealanders for a future life in a better country than this sad backward moving little place.
Wayne
What the hell is Bollard trying to achieve? If by this - and aided by our idiot politicians - he is attempting to rid NZ of NZers, he may very well be achieving his goal. We see our political leaders using the sad death of an Auckland woman for political game scoring - nothing more than fiddling while NZ burns. Is there anyone with any sense of the reality of real life in NZ? Is there anyone who really understands the damage being created to the people of this once fine country? Is there any politician who really gives a damn? Why should we - as employees - be increasingly punished simply because we work hard. And if - because I work hard - I wish to buy a new TV then why should I not have that right? Why am I - as a new homeowner - being punished because I wish to live in my own house? Has anyone asked the question as to how many rental properties our own politicians own? However I guess any interest increase is not important to them as they are being fed from our sweat, blood and tears. This is just wrong.
Davey.(Timaru)
We extracated ourselves from running a business in NZ nine months ago after buckling under Government rules,regulations and increased taxes/interest rates. I now work for a company that exports over 95 per cent of it's product..for them the high dollar is a nightmare..for us it is an excellent time to cash up and move overseas to leave behind the maelstrom that will surely come.This Labour Government will reap as it has sown with Bollard almost rendered powerless to prevent the impending train-smash.
Jon Greystoke (Auckland butnot for long)
I am always comforted by the fact that the person dictating how much enjoyment we get from our lifestyle (eg the amount he allows us to have left over from our lower wages due to our reduced export capacity and our higher mortgages from higher interest costs) does so from his perch where he sits contemplating how to invest his $10,000 dollar per week salary into the opportunities he is denying us. Did he go to school longer than us, is he brighter than us.?I met a guy far more experienced at the economy than him yesterday, He's a family man driving the taxi - and he offered to do the job for less.
Matt
The interest rate rise is ridiculous. Although Bollard may know it, he fails to acknowledge that most home owners and investors have fixed rate mortgages that extend out to 2010 so the rate increase does not impact on them.Although not in his power, the government (more particularly the IRD) needs to think about more aggressively targeting people who buy residential property with the intention to sell it later for a profit. This would slow down property sales.
Jonathan
I agree with Le Fox, people are starting to struggle on $100k pa. There needs to be another way of controlling spending. It will soon get to the point when $100k pa is the middle income bracket. I've just recently got my NZ residency and I'm wondering if I should stay here much longer. Going back to the UK seems extremely tempting.
Vincent
Disappointing.This recent rate hike is yet another example of how out of touch Mr Bollard really is with modern economic principles. Does he not get it that all the extra money collected by banks as a result of this increase will be moved off-shore as most of the trading banks are foreign owed? Perhaps that's his intention, help that fat cats get fatter. Sadly a change in government will not actually alter this mad mans approach.
Richard Prosser
This would be hilarious if it wasn't so destructive and sad. Bollard has only one tool in his toolbox, and it doesn't work. It's like Grandpa Simpson when his mate gets his beard caught in the pencil sharpener...Abe keeps winding the handle, and eveytime he does, it gets worse, but he keeps winding it, because that's all he can do. Why doesn't he halve the cash rate instead? That would take the heat out of the dollar, make housing affordable, and let people pay off debt faster.
Working NZer
Too hard to swallow? Dr Bollard noted that although lending rates had risen significantly it has not yielded the anticipated reduction in consumer spending that was expected. Shouldn't he reasonably assume then that much of the evil consumer spending is not fundamentally driven by the poor souls with mortgages?I wonder what lever the reserve bank has for those without mortgages that engage in consumer spending habits supported by ever present consumer finance?
Interested or not??
I think I need an economics 101!! The Reserve Bank wants to encourage growth, but we stifle the companies that are providing it (the exporters). The bank wants us to stop spending our money on consumer goods but the rising interest rate invites further buying of our currency. Low and behold the currency strengthens once more and the consumer goods get cheaper again. Hello! Perhaps the light is on but no one is home in the reserve bank.
Ray
All the vitriol toward Dr. Bollard and the OCR raising just proves his point to a large extent. We're all swimming in debt, that's why we bitch. If you're a depositor or saver you're laughing with an OCR increase. The guy's only doing his job, and following the Reserve Bank Act as is his responsibility. Blame Aunty Helen for not providing him with an alternative instrument for controlling inflation.
Zpete (Mt Wellington)
Simply, the man has lost the plot. He is hurting the wrong people, people who are trapped into high interest payments of his making. People who have mortgages long before he came on the scene. Bring back Brash.
Paul
Please show me where I can apply for the job of Reserve Bank Governor! It seems the only qualification is to add a quarter of a per cent interest to the OCR every couple of months. Not bad for a great salary.This one trick pony is right up there with the tired and pitiful labour party that NZ'rs keep voting into power. NZ deserves a more dynamic thinking individual who can think with his mind rather than his fists. Wake up Bollard, your passionate battle with homeowners, via interest rates alone, is actually creating a worse problem than the one you claim to be fighting.Let's all wave bye-bye to all the jobs, companies and skilled people (including our children) that will be moving off-shore.
Jon (Auckland)
I honestly thing Dr. Bollard and the reserve bank are missing something. They key to high inflation is not the interest rates, but rather the tax benefits associated with the debt one has with home ownership. They should set up property gains tax on second/third (etc) homes which will see demand for property drop, hopefully house prices will stabilize if not fall, reducing the demand for debt as well.
Philip W
I thought you couldn't have growth without inflation. I'de be picking that the death knell for the prime minister and the government has started, with middle New Zealand again picking up the tab. I guess when we all have nothing then truly we will be in a Labour government paradise.
Mike (Auckland)
Question: You want me to use Kiwisaver and save for my retirement? How the heck am I to do that when anything extra I have left (which is currently nil) goes towards the increase interest cost of my mortgage. Come on Bolland, Cullen & Co, I used to have a comfortable life one mortgage, one credit card, a beautiful wife and our first child; now my wife is having to go back to work to help pay the mortgage and someone else will have to look after our child in day care and that to me isn't good family values. Hello Australia good by New Zealand, anyone know of a good freight company.
Ray Clarke
The Government are definitely to blame as they are a high taxing, high spending Government. When you add the cost of Council rates into the equation we will be stuck with high interest rates until Labour is removed from power next year. The first homeowner is being forced out of the market place as they cannot afford the debt servicing costs. Those folk are most likely Labour Party voters so in essence the Government is dealing to their own supporters.
Chris Rout
Rule 1: Interest Rates go up and Interest Rates go down, lets call that an economic cycle. Rule 2: If you borrow it costs you more when interest rates rise.Rule 3: If you save it earns you more when interest rates rise. Simple answer: Make the most of the situation, reduce consuming, pay off your debt and start saving. If you're saving already(i.e. no debt) laugh your way to the bank. Exporters: You should have picked up the forex risks when you performed a Swot analysis before starting your business and factored in contingencies appropriately. Most importantly stop whingeing!
Kath
If the govt is serious about curbing the housing market, how about making it easier for: Citizens of NZ who have to part with their paltry NZ salaries - as opposed to foreigners who can swoop in and pay a lot more. First-time buyers, plus those struggling to pay their existing mortgages - as opposed to serial investors who have other investment options. Surely this would make more sense than hiking up the OCR - which hurts exporters, and in turn the workers, and in turn, the whole country!
Nigel (Hamilton)
I run a small editing business for Japanese companies and get paid in yen. I have seen 10,000 yen change from 200 dollars to less than 110 dollars. To compensate I work up to 16 hours a day. However, it is now time to move my enterprise and family offshore as the government adheres to the old Vietnam dictum of we 'had to destroy the village in order to save it'. Personally, I am now tired of being napalmed.
Mrs Kenney (North Shore City)
We are starting to change our minds about moving to Australia. We were determined to stay here in New Zealand but it feels like every week this govt does something that seems to push us towards leaving! In a few years time, I don't think there will be many who didn't leave NZ for fairer shores. We're going to sell up and move on. Good luck NZ. You're going to need it. P.S. Will stay an All Blacks supporter though! LOL.
Fashion Importer (Epsom)
Total madness, Dr. Bollard's further interest rate increase will lead to record highs for the NZ dollar. Instead of rewarding exporters, who are wealth producers the government is destroying them, and with them the long term infrastructure of the economy. The correct course of action is to gradually reduce interest rates to make it less attractive for investors to borrow yen at low rates and invest in NZ at very high rates. The gradual increase in consumer goods will reduce spending. Property prices in my opinion will not increase as the rental returns are too low. And, Banks will have less money to lend on mortgages.I believe the Labour government has just signed its own death warrant.
Sean22 (Auckland)
I am absolutely sick to death of this government. People wont admit it, but the enormous immigration is driving up house prices (labour governments traditionally do well from the immigrant vote) out of the reach of the ordinary New Zealander. Also is the government's out of control spending-all for benefits. I sometimes wonder what's the point in working. I'm certainly voting national next time!
Dave
It's very hard to constrain inflation to stop aggregate consumer demand by altering the OCR when it is govt spending that is fuelling inflation. Increased Govt spending is not going to be minimised by raising interest rates, is it?Come on journalists, ask the hard questions!
WTF
Listen all you people complaining and whining about this rate rise. You need to look at the reasons and ask yourself if you are part of the problem. If not, then complain away but I suspect that many of you don't deserve to complain due to your shortcomings in grasping the issue. How many of you voted labour or intend to vote labour. You people can shutup for starters. Socialist policy has proven the world over to have knock on effects like this. Sold a house of late? Made some capital gain?. We all like that don't we. A capital gains tax would sort that market out - oh but wait that would be unfair to the ordinary kiwi. Bought a new fridge or appliance or car on finance? Thats because you don't have the money and can't really afford it. Get a reality check or a better paying job and stop spending money you don't actually have.
Brent Ellerm
Well we might have more brains than Australia but I think they would do a better job in running our country.
Ross Wall
Once again the average New Zealander is the one whom gets hurt as a result of an interest rate rise "that has to happen". The only way to curb the inflation rate is for the government to install both a Capital Gains Tax on the sale of investment properties (not principal places of residence) and a hefty pro-rata stamp duty on the purchase of all properties sold over the value of $400K. This will slow the spiraling out of control property market and in doing so ease the inflation rate and the value of the NZ dollar. Unfortunately the average Kiwi doesn't have a vast amount of money invested in real estate. People who have the real-estate investments ,create NZ policy ,think only of themselves and will not implement the necessary changes needed to make the dream of owning your own home probable not impossible.
Jepz
The rate rise announced by Dr. Bollard should be viewed as the best tool available to combat the threat of Inflation. Another tool he could use is to increase bank reserves to squeeze the amount of loanable money in the market. But he chose not to use the latter tool. Exporters must now think seriously of immigrating or automating to counter the rate hike. Or face the possibility of extinction. Unless the government institute a Capital Gains tax or other measures to curb real estate investments or foreign business acquisition, Investors will continue to pour money into New Zealand. And money will continue to flow-out of New Zealand. And the economy will continue to sizzle unabated by any future rate hikes.
Bren
Once again a major contributing factor is this useless Labour government, they sure can spend our over taxed dollars well - Get rid of Helen and Dr Scrooge.
Dougal (AKL)
My wife and I have been considering moving over the ditch to Aus on and off over the last few years. This is providing the final straw. As much as we love NZ and the lifestyle here the simple economic realities of life in the two countries are hitting home. We have a 1 year old son and when I look to the future of how I can best provide for him I am increasingly faced with the pull of Aus. Granted life is not perfect there, but I can earn more, save a few thousand dollars a year on my mortgage, and enjoy a very comparable lifestyle. Any one of these points is not enough on its own, but faced with a reality of all of these trumping NZ we are faced with very compelling reasons to sell up and contribute our skills and hard work to another society instead of trudging on the grindstone here.
KiwiJohn
Sir Roger Douglas should qualify what he means by the "worst" Government in 50 years. If he is referring to the most callous, incompetent, short-sighted, cowardly, immature, drab, boring and ugly bunch we have had around for that time, then I agree.
Toby (Wellington)
Thanks to Bollard for essentially widening the gap between rich and poor by preventing new entrants into the homeowner market. If I was on the other side of the fence I'd be off to Aus too.
Christopher
If you're one of the 41 per cent of NZers who voted in the last election for Labour under Cullen's big-spend policy, then you can't complain. This spending has proven Cullen's dire warnings against National's tax cuts and their impact on inflation and interest rates to be total nonsense. It's time someone stood up and declared that yes, they will cut public spending, most of which is in unproductive areas (ie. bureaucracy) anyway, so it will make no difference to front line services at all, except maybe make them more efficient.Cut the enormous waste in public spending, and deflate that property bubble (end speculative auctions, stop selling land to foreign investors, threaten capital gains taxes and reduce building constraints).
JR (Wellington)
With 25 per cent of the workforce now being paid for by the state, monetary controls can never be effective. Also there must be many private businesses out there that are now totally dependent on State funded tenders. Thank God for the NZ farmers - even though we get envious when they prosper. In many instances the only difference between a State beneficiary and a State employee is the dollar amount on payday. The employee may even be working hard, but who is benefiting from their efforts ? Its time to reduce this form of State dependency (votes for election day) and get people into productive and worthwhile employment.
rahuldixit
Ooh! The folly of men and impotent governments. But why is everyone so uptight now. After all,it's you idiots who voted this government in. Well live with it.
Thank God Australia is not too far.
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