Saturday, July 26, 2008
A worldwide recession is coming. China, India, Brazil, and third world economies simply cannot pick up the slack for the US, UK, EU, and now New Zealand.
Alan Bollard, governor of the Reserve Bank of New Zealand, cut the rate from 8.25 per cent to 8 per cent - still the highest in the industrialised world after Iceland - despite rising inflation, forecast to peak at 5 per cent by September. The move surprised many as it contradicts the Reserve Bank's mandate, which states that achieving and maintaining price stability are the sole objectives of monetary policy. The central bank's stated inflation target band is 1 to 3 per cent.