‘Outlook brighter’

Press, 17 May 1989, Page 34

‘Outlook brighter’

PA Auckland The outlook for the economy is brighter now than at any stage since 1973, according to Reserve Bank Governor, Dr Don Brash. Addressing the Women in Management Network in Auckland, he added: “However, if this path to recovery is to be as painless as possible it is important that people’s expectations of inflation fall in line with the actual inflation rate.” If this did not happen, there would be unnecessary unemployment costs and interest rates would remain too high. Dr Brash said many of the fundamental problems afflicting the economy through the late 1970 s and early

1980 s had been addressed. Inflation, the fiscal and overseas current account deficits had all been reduced and the economy now offered many more opportunities for investment. The Reserve Bank was serious about achieving stable prices at 0 per cent to 2% inflation. “It is important that behaviour and decisions within the business world start to reflect expectations of inflation that mirror the bank’s commitment to reduced inflation rates,” Dr Brash said. “If this can happen I am confident that not only will there be sustainable economic recovery, but unemployment and interest rates will decrease.”