Inevitable effect

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