HomeOpinionOCR hike will add to inflation and hurt less well off

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Chris Leitch
Chris Leitchhttps://www.socialcredit.nz/
Chris Leitch was a campaigner for monetary reform since 1972. He was a former elected member of the Auckland Regional Services Trust and the first ever Alliance Party candidate, standing in the Tamaki by-election in 1992. He was the Social Credit Party's Whangarei candidate and leader. He passed away in January 2023 after a long battle with cancer.

OCR hike will add to inflation and hurt less well off

The orthodox attempt by the Reserve Bank to control inflation by lifting the Official Cash Rate by 50 basis points will hurt beneficiaries, superannuitants, and the low paid with a double whammy effect as businesses recover their additional interest charges by pushing up their prices.

Rising mortgage payments and rising rents will exert real pressure on those already struggling to make ends meet and the increased costs due to supply chain issues will add even more.

What the bank has done is like adding more fuel to a fire that is already out of control.

It’s put pressure on businesses, the very sector of the economy that needs to retain staff and ramp up production of goods and services to meet the demand in the economy.

The Reserve Bank should have curbed the avalanche of mortgage money creation that has been indulged in by the commercial banks – over $98 billion in the last twelve months, five times their total average yearly money creation for all types of lending.

The increase in the OCR will also add to already record commercial bank profits in a year when most other business have been doing it hard.

The Reserve Bank needs to establish just who is in charge of the country’s financial system, itself or the commercial banks.

It should direct banks to cut interest rates on working capital for businesses and channel a greater proportion of their lending into the business sector, allowing manufacturers to expand, invest in new technology to overcome the shortage of workers, and increase production.

It could have adapted its Funds For Lending programme to provide reserves for banks at zero interest provided the banks make a significant cut in lending rates on working capital for businesses, and fund start-ups to produce much more of what New Zealanders need right here to reduce the reliance on imports.

Falling into the usual trap of raising interest rates will exacerbate the inflation problem, resulting in increased costs, reduced production and hardship for small businesses, home owners and those on fixed or low incomes.

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  1. OCR cannot be below the rate of inflation. Or else it is just a matter of wealth from savers who kept in dollars instead of investing in house or gold.

    OCR is created poverty and not the other way arround. Yes, increasing OCR will hurt who borrowed beyond their means. What is wrong with it? The whole financial system is designed to rob weath and shit to the vested interest groups.

    If our dollar is tied to gold and does not remain as a fiat currency, there will be less legalised corruption by politicians. The gay economics created 65 billion dollars from thin air and it is going to hurt for years to come.

    The trickle down economy due to growth in economy driven by the creation of money from thin air is basically fradulent in principle.

  2. The irresponsible money printing by this govt for this fake pandemic combined with the irresponsible lowering of the OCR by the reserve bank over the last decade is what has caused this. All done on purpose of course to further enslave the young generations and poor or those with limited income.


    • Yep, the reserve bank in my opinion should have been increasing the OCR years ago to tame the runaway house prices. Then the government printing money for their covid response, and the covid response, fueled the inflation. Not whats happening in Ukraine.

      3 to 6 months after the handouts started asset price inflation went crazy. Houses, vehicles, collectibles

  3. Search for “grocery haul” on YouTube and look at the recent videos for prices in US. On a dollar to dollar basis, prices in US are now on par with what is NZ. Food prices in US used to be half of what we were paying in NZ. Brenden created 40% of the dollars ever existed last year and inflation is out of control. It is going to go up further in US and elsewhere. American politicians and all the legacy media call it as “Putin Price Hike” when excessive diluation of the USD is the root cause. Petrol prices vary because of taxes but food price comparison is meaningfull. Given that our ino are low, we already have high cost of living, which is going to get worse thanks to Jabcinda.


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