Federated Farmers says the government cannot continue borrowing money at a rate of $496 a second, and that it has bite the bullet and introduce some fiscal discipline in May’s upcoming budget.

The Reserve Bank held the Official Cash Rate at 2.5 percent this week.

Reserve Bank governor, Alan Bollard, says the New Zealand economy remains uncertain in the wake of Christchurch’s earthquakes with business and consumer confidence and tourism spending all down.

Alan Bollard says that given the outlook for core inflation and continued economic disruption stemming from the earthquakes, the OCR is likely to remain at this level for some time.
 
Federated Farmers economics spokesperson, Phillip York, says that by holding interest rates the Reserve Bank has sent a powerful message to the government before next month’s budget.

Mr York says it is a sign that government must reign in its spending and make significant structural reforms.
 
“The government is going to have to tighten up – they can’t continue to borrow $496 a second.

“This should have been done a couple of years ago but they’ve been trying to protect people from the recession.

“In the end they’ve been kicking the can down the road and eventually it’s hit a wall and now they’re going to have to pick this can up and deal with it properly.“