Growth Targets Look Unlikely
"While many people may be disappointed with the Reserve Bank's decision to raise interest rates today, Dr Brash has taken the only option he can," says National's Finance spokesman David Carter.
Mr Carter says Don Brash increased the Official Cash Rate because he is concerned about the economy's capacity to grow without generating inflation.
"Dr Brash will be accused of jumping on the brakes too early, but in reality he had no option. He is actually taking his foot off the accelerator to prevent any breach of at the top end of the 0-3 per cent inflation band."
Mr Carter says the interest rate increase is a reminder to the Government about the effects of its economic policy.
"Sound policy is all about building the capacity for the economy to grow at a faster rate without generating inflation.
"Government must implement polices that support growth not lean against it. In particular, this means removing roadblocks to growth and ensuring we have a skilled workforce that wants to stay in New Zealand.
"I was most concerned to hear Dr Brash tell the Finance and Expenditure Committee this morning that there is 'no tangible evidence that we can achieve 4 per cent growth'.
"This comment adds to my growing unease about forecasts for labour productivity which are only predicted to rise by 0.75 per cent in 2003 and 0.25 per cent in 2004.
"These numbers aren't anywhere near the sort of performance required to lift New Zealand's economy back into the top half of the OECD," Mr Carter concluded.