Upston Louise: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Upston Louise: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 06 December 2012. Volume:686;Page:7266. Text is incorporated into the Bound Volume.] 
1. 
LOUISE UPSTON (National—Taupo) 
 to the  
Minister of Finance 
: What reports has he received on the economy? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 This morning the Reserve Bank issued its Monetary Policy Statement for December. It confirmed that the official cash rate has remained unchanged at 2.5 percent supported by the Government’s fiscal policy and reducing offshore financing costs. This will help keep New Zealanders’ interest rates lower for longer. A family with a $200000 floating rate mortgage is now paying $200 a week less in interest costs than they were 4 years ago. It is a significant saving in difficult times that is enabling them to further reduce their debt. The Monetary Policy Statement today presented a similar overall economic outlook to the previous statement in September. The outlook is slightly weaker in the near term but activity is expected to be stronger in 2014-15. 
Louise Upston 
: What does the Reserve Bank say about the cost of living and forecasts for the consumer price inflation? 
Hon BILL ENGLISH 
: Current CPI inflation is at 0.8 percent which is the lowest it has been in nearly 13 years. The Reserve Bank expects inflation to remain comfortably within the target band. That is good news for families who are trying to save and get ahead. They have got the lowest interest rates on mortgages in around 40 years and the lowest inflation in 13 years. The strong New Zealand dollar is helping to keep tradable sector inflation low as is the spare capacity in the economy. 
Louise Upston 
: What are the Reserve Bank’s forecasts for economic growth over the next 3 years and what are the main factors behind those forecasts? 
Hon BILL ENGLISH 
: The bank projects annual real GDP growth of 2.2 percent 2.8 percent and 2.9 percent respectively over the next 3 years. The forecasts are a little weaker in the short term but are higher over year 2 and year 3. This is consistent with the recent history of the economy ticking along at growth rates of around 2 or 3 percent. The bank noted four key factors influencing the outlook: the Canterbury rebuild that global economic activity and inflation are expected to remain subdued that the kiwi dollar is expected to remain high and that tighter fiscal policy is expected to dampen demand. 
Hon David Parker 
: Given today’s news that the Governor of the Reserve Bank is negotiating the use of macro-prudential tools like loan-to-valuation ratios does he now admit that for the last 4 years he was wrong in saying that our monetary policy required no change because it was already world’s best practice? 
Hon BILL ENGLISH 
: No. In fact I have been part of those negotiations for the last 4 years. 
Louise Upston 
: What impact has the uncertain global economic situation had on the Reserve Bank’s outlook for the economy? 
Hon BILL ENGLISH 
: It continues to have a significant bearing on the outlook for New Zealand and at times I think on confidence in New Zealand. The euro area remains in recession growth prospects are seen to be improving in the US and China but the international economy continues to weigh on our prospects. It would certainly be helpful for everybody if the US was able to resolve its current issues around its fiscal deficit its fiscal policy and its debt ceiling. If that occurred the US economy might do better next year than expected and as the world’s largest economy that would certainly help us.