Not one, but two rate rises ahead, warns economist
12:00PM Tuesday April 17, 2007
Economist Gareth Morgan believes the Reserve Bank will move on interest rates twice within the next quarter.
The kiwi dollar is trading at around the US74c, breaking records set over two years ago. Morgan said the Reserve Bank has no choice but to raise rates, as the economy has run too hot for too long, and the central bank now has to make up for lost time.
He said if the government really wanted to quieten the economy down, the last thing it should be doing now is pouring money into roads, health services, and infrastructure - generating full employment and excess demand.
He is convinced the probability of a housing market crash is rising by the month, and said a government dereliction of duty in policy setting is firmly to blame.
As the currency scales new highs, the volume of concern from the export sector grows.
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