OCR higher under Labour for nine years

OCR

(Source data: http://www.rbnz.govt.nz/monetary_policy/ocr/)

The OCR was launched as a monetary policy tool in March 1999, at 4.5%.

After Labour was elected in 1999, it was increased to 5%.  It peaked at 8.25% in July 2007 and stayed that high until July 2008.

On the day of the 2008 election, 8 November 2008, the OCR was 6.5%.

This means, for the whole period of the Helen Clark government, the OCR was between 5.0 and 6.5% after traversing the heights of 8.25%.  

After National was elected, the OCR fell to 5% on 4 December 2008 and then to 3.5% in January 2009.  It has remained below this rate ever since – and went artificially low to 2.5% to stimulate the economy after the Global Financial Crisis and February 2011 Christchurch earthquake.

On 3 October 2013, when the OCR was still 2.5%, the Governor of the Reserve Bank, Graeme Wheeler, published an op-ed in which he said:

“We currently expect that the official cash rate could increase by 2 percent from 2014 to the beginning of 2016.”

This means the bank is saying that over the next two years, the OCR may make it back to 4.5% – which would be the same level it was launched at in 1999 and lower than it ever was under Helen Clark and Michael Cullen.

It would then start falling again.

In the bank’s OCR announcement on 24 April, when it was raised to 3% – far lower than at any time under Helen Clark and Michael Cullen – Mr Wheeler indicated the OCR increases may be slower and lower than previously expected.  So we may not even reach 4.5% by the beginning of 2016.

And this is meant to be a crisis that is worth imposing higher costs on the poor to give to the rich, as David Parker has proposed?

Labour are seriously out to lunch on this issue, once again manufacturing a crisis where none exists.

 


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