November 8th, 2024

Green Party criticises RBNZ's OCR hike, opposition calls for alternative measures

New Zealand parliament building: The Prime Minister emphasised a focus on providing assistance to families, seniors, caregivers, students, and workers, with wage increases, subsidies, and tax credits among the key initiatives.
New Zealand parliament building: The Prime Minister emphasised a focus on providing assistance to families, seniors, caregivers, students, and workers, with wage increases, subsidies, and tax credits among the key initiatives.

The Reserve Bank of New Zealand's decision to increase its Official Cash Rate (OCR) by 50 basis points from 4.75% to 5.25% has been met with criticism from the Green Party, a member of the government coalition, and the opposition National Party.

The Green Party criticised the government's response to inflation, stating that the decision not to implement deflationary measures or wealth taxes had been a "choice." In a Tweet, the party said, "The Govt’s refusal to use deflationary measures such as excess profits taxes on banks, or wealth taxes on those who profited handsomely through the global pandemic, are choices. Today's RBNZ OCR rise will cause unnecessary & disproportionate pain for lower income NZ households."

The leader of the National Party, Christopher Luxon, also expressed concern about the impact of the OCR increase on New Zealanders, particularly those with mortgages.

He said "The cost-of-living just keeps climbing under Labour. Someone with an average mortgage of around $400,000 will pay $300 per week more in interest if they fix their mortgage now, compared with 18 months ago. That is crippling." Luxon also called for the government to consider alternative measures to manage inflation, stating, "We need a comprehensive plan to tackle inflation, which includes tax reform, reduced red tape and increased competition."

The Monetary Policy Committee (MPC), which made the decision to increase the OCR, cited the need to address inflation concerns and return inflation to the target range of 1-3% over the medium term. The MPC acknowledged the persistent inflation and employment issues but deemed the OCR increase as necessary to address these concerns.

The criticism from opposition parties and the Green Party highlights the need for the government and the RBNZ to consider alternative measures to manage inflation that would not disproportionately affect low-income households. It remains to be seen how the OCR increase will impact the New Zealand economy and its citizens.