Monetary policy

Press, 29 August 1989, Page 20

Monetary policy

Sir, —The Governor of the Reserve Bank, Dr Brash, said today that if lower interest rates led to an increase in consumer activity he would move to further tighten monetary policy. This was a perfectly understandable comment, but Dr Brash just cannot really see the full picture clearly. Perhaps he is looking at the Barclays index every night and, seeing the exciting rises, thinks the roundabout is turning again. He does not understand the depth of the financial hurt New Zealanders have felt in the economic shambles of the last few years. People will not quickly recover from this. Seventy-five per cent of the Barclays index is composed of the top 10 New Zealand companies and we all know the big

powerful companies are capitalising on some of the weaker companies’ misfortunes and doing very well indeed. Sir Robert Jones’ comment that the company scene had been an “unmitigated shambles” is a more realistic assessment of the state of the economy. Dr Brash does not need to worry as most people will take five years or more to recover from this Labour Government and any wild spending sprees are unlikely, except at the traditional time just before the election as economic policy is programmed to the election.—Yours, etc., W. J. C. ROYDS. August 23, 1989.