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Labour urges RBNZ not to jump gun on rates

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"Today's CPI result shows there is no immediate pressure on the Reserve Bank to push up interest rates in the November 17 Monetary Policy Statement," Labour finance spokesperson Michael Cullen said.

He urged the RBNZ Governor, Dr Don Brash, to "take a deep breath" before raising the overnight cash rate.

"While the CPI increase for the September year at 1.3 percent, is broadly in line with the RBNZ's forecasts, the fact is that the quarterly movement was mostly a reflection of one-off factors.

"The big contributers, apart from petrol prices, were a 25.4 percent increase in motor vehicle relicensing, registration and warrant of fitness fees as a result of government policy changes.

"There is little evidence at this stage of any serious accumulation of inflationary pressures in the economy.

"I would therefore urge Dr Brash to move cautiously on interest rates, especially given figures this week showing a growing number of New Zealanders are already on the edge financially and could ill-afford an increase in credit costs.

"The debt collection agency, Baycorp, has reported that the failure rate among people it ran credit checks on in the first half of this year was 22.8 percent - up from 19.7 percent in the same period last year.

"And budgeting advice groups are experiencing a huge increase in the numbers of New Zealanders seeking budgeting advice and unable to pay their bills.

"An increase in interest rates could be devastating for these households and should be avoided for as long as possible," Dr Cullen said.

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