Fran O’Sullivan on the OCR cut

Fran O’Sullivan comments here on the OCR cut.

Governor Alan Bollard’s warning that “ongoing financial market turmoil and the marked deterioration in the outlook for global growth have played a large role in shaping today’s decision” will cause Key’s team to take another stock-take on just how much tax revenue the Government can expect next year to fuel its operations, and, whether it will have to borrow more than currently planned to stimulate the economy.

The level of borrowing may well be an issue as we move forward.

Ms O’Sullivan notes also that Bollard targetted electricity prices and rates as negative factors regarding future inflation. Will the government hold back on the massive profiteering of the 3 state owned power companies, after all Cullen did not. yet they probably should so as to maintain growth, this where waste reduction in respect of poor quality public spend is needed.

Rodney Hide may well take Bollard’s comments on rates as giving him a hunting licence.