But for the latest upsurge in house prices, the Reserve Bank would probably have made another cut in the official cash rate yesterday. It needs to keep its interest rates in line with those overseas so that the dollar’s exchange rate does not rise and diminish export returns for farmers and other productive industries. The governor, Graeme Wheeler, conceded that the exchange rate is already “higher than appropriate” with dairy and other commodity export prices low at the moment. The governor’s survey of the international economy was almost entirely an argument for another reduction in the official cash rate after his unexpected cut last month.
READ MORE VIA NZHERALD