"Savers need to start investing."

Reserve Bank governor Adrian Orr says that savers need to find ways of putting their capital “more to work” given the low interest rates, and should think about generating new investments rather than letting their money simply sit in a bank account.

Orr told the finance and expenditure select committee that the Reserve Bank’s aim with the latest OCR cut was to give spending a boost, and encouraged New Zealanders to make the most of an environment where the hurdles for business investment are vastly reduced.

“When you have lower interest rates you have to be thinking much harder around the form of investment,” Orr said.

“The form of investment means putting your capital more to work, which is about creating real investment rather than just sitting in the bank account with all of the returns going to the owners of the bank.

“Somehow in the psyche of New Zealand, we all have to rush toward thinking ‘oh well, it must mean I have to rush to borrow to buy a house’. We are not saying that. We are saying spending and investing is now much easier.”

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