Farmers oppose printing money
Tuesday 9 Oct 2012 2:43 p.m.
Federated Farmers says printing money, known as quantitative easing, would be "incredibly bad" for New Zealand
The country's biggest export sector is strongly opposed to the Green Party's suggestion that the Government should print money to bring down the value of the dollar.
The agricultural sector sells most of its products overseas and Federated Farmers says printing money, known as quantitative easing, would be "incredibly bad" for New Zealand.
Green's co-leader Russel Norman made the call on Sunday, saying the Reserve Bank should print about $2 billion and use it to buy earthquake bonds.
He says there would be immediate downward pressure on the exchange rate, which exporters are blaming for a string of recent redundancies.
The Government has rejected the idea and Federated Farmers president Bruce Wills says it would "set off an inflationary bomb that risks returning New Zealand to the dark days of double-digit interest rates".
Mr Wills says quantitative easing should be a "break glass in case of fire" policy option.
"New Zealand is nowhere near such desperate measures because our official cash rate is 2.5 percent versus 0.5 percent in the United Kingdom, 0.25 percent in the United States and 0.10 percent in Japan."
Prime Minister John Key said yesterday quantitative easing was a high-risk strategy that wouldn't necessarily bring down the exchange rate.
"We know it adds to inflation and it would put up the price of everything, like petrol and mortgages," he said.
Economic Development Minister Steven Joyce has described Dr Norman's suggestion as "well-meaning lunacy".