28 October 2004

Interest Rates Voodoo Economics

Rt Hon Winston Peters says he’s appalled by the Reserve Bank’s decision to increase the Official Cash Rate from 6.25 percent to 6.50 percent.

“Over the last twelve months the Official Cash Rate has risen from 5 percent to 6.5 percent, and once again, inflation is being named as the culprit.

“But the key driver of inflation – high immigration feeding high Auckland house prices – continues to be ignored. What the rest of New Zealand gets from high Auckland house prices is artificially high interest rates or voodoo economics.

“While the Government is happy to hide behind the façade of economic growth, ordinary New Zealanders struggling to pay their mortgages and run businesses are faced with the highest interest rates in the developed world.

“We are told just about every day by the media that the New Zealand economy is booming, but the continuous rise in interest rates is crippling exporters and businesspeople

“New Zealand has now become an importer’s heaven and an exporter’s hell, and these new interest rates show that it’s only going to get worse,” said Mr Peters.

ENDS

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