Media Release

26 June 2007

Cash Rate Rise Highlights Reserve Bank Act Deficiencies

Today’s rise in the Official Cash Rate highlights the flawed logic of relying on a singular narrow focus with only one tool to control monetary policy, and strengthens calls for a re-write of the Reserve Bank Act according to New Zealand First Economic Development spokesman Doug Woolerton.

“The latest increase will amplify further pressures on our already suffering export sector fighting the effects of our overvalued currency, " said Mr Woolerton.

“New Zealand has the highest interest rates in the developed world, by some distance, and a dollar on a post-float high. The action required is a serious look at the policy settings, not more of the same flawed imported orthodoxy.

“New Zealand First has tried four times to introduce a Member's bill which would give the Governor a broader and more balanced brief of considerations when setting monetary policy, but five times it has been blocked by the National party”.

“It is time to do something to help those in our economy upon whom we all depend. We just must not sit idly by, with our heads in the sand as the two old parties are, and watch more and more businesses go to the wall. Re-writing the Reserve Bank Act is where we must start”, said Mr Woolerton.

ENDS

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