The Press

In­evitable ef­fect

- Business · Finance · Reserve Bank of India

The Re­serve Bank’s mon­e­tary pol­icy of ‘‘pro­gres­sive eas­ing’’ of the cash rate may be bet­ter termed tin­ker­ing, and, with our present pop­u­la­tion growth, could have been ex­pected to have its un­in­tended and un­de­sir­able con­se­quences.

The time-hon­oured prin­ci­ples of sup­ply and de­mand are ap­pli­ca­ble to in­ter­est rates as well as to goods and ser­vices. Adrian Orr is not the new Mes­siah and, though the Re­serve Bank’s pol­icy has boosted gen­eral re­tail spend­ing, pop­u­la­tion growth (in­clud­ing more New Zealan­ders re­turn­ing from over­seas and fewer leav­ing), his cheaper and more abun­dant fi­nance have had the in­evitable ef­fect on an in­elas­tic hous­ing sup­ply. Our pop­u­la­tion growth alone may have been suf­fi­cient to pro­vide the de­sired re­tail buoy­ancy.

D Mee, North­wood

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