Federated Farmers has welcomed the Reserve Bank’s decision on Thursday to hold the Official Cash Rate at three percent.

The farming lobby group has long warned against tinkering with the OCR as farmers seek to pay off debt and rebuild on the back of good global commodity prices.

The Feds’ Finance spokesperson, Philip York, says despite these factors, the economic environment may force the reserve bank to increase the cost of borrowing before the election.

“I’m just scared I’m going to turn into ‘Mr. Nasty’ soon, because if there’s many wage demands we might have to soon look at some interest rate movement.

“At the moment that’s not the case, and they’re talking about looking at September.

“That’s still a long way away, I’m wondering if they’ll have to do something before September, let’s hope not.”

Philip York says despite this, he was encouraged to hear Prime Minister John Key’s speech on Wednesday which made clear that our current policy of borrowing was not sustainable.

“We’re pleased to see the Prime Minister come out and say the borrowing is not sustainable, and we’re going to have to do something about it.

“I get depressed with a New Zealand democracy when I see the majority of the public don’t think you have to sell off assets when you get into strife, they think the fairies at the bottom of the garden will solve the problem.”

The Prime Minister’s speech mirrors recent addresses by both the US and UK governments around costs reductions in many public sectors.