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Hi Jenny, Hi Richard, Hi Don, Higher interest rate

Today's interest rate rise shows National's scare campaign that an Alliance Labour government would increase interest rates is dishonest, Alliance leader Jim Anderton says.

'Today's announcement shows how National and Act deliberately use higher interest rates to control the economy. They are the high-interest rate parties.

'This is a declaration that this is about as good as it gets under National and Act. As far as Mrs Shipley, Mr Prebble, and Mr Brash are concerned, the good times are over and now we have to tighten our belts around our throats. If you missed the golden weather, you're like 80% of New Zealanders.

'Our export sector is already very weak and the deliberate increase in interest rates will simply make the economy even more fragile. Increasing interest rates at a time when the balance of payments deficit is blowing out and exports are actually falling is like throwing out the anchor on the America's Cup boat that's coming second.

'New Zealand already has among the highest real interest rates in the developed world. Now farmers and other exporters are being punished again, even though the export sector declined by 4.8% in the June quarter.

'By slamming into the economy with higher interest rates the Reserve Bank is again ensuring that unemployment will not fall below 6% of the workforce regardless of the human costs.

'Yesterday Bill English said bankers haven't taken any notice of politicians for years, but today his billboards proclaiming higher interests rates under a Labour-Alliance government are still up. National cannot have it both ways. They cannot claim one day that interest rates will rise under the Labour and the Alliance but then the next day say politicians have no effect on interest rates. They cannot claim interest rates will only rise under the Labour and the Alliance when they are rising under National and Act ten days before election day.

The Alliance will achieve lower interest rates by changing the Reserve Bank Act to widen its goals to: low inflation, full employment, balance of payments stability and GDP growth. The Bank would use a much wider range of policy instruments to achieve its targets.

'If the Reserve Bank was not using the sole instrument of higher interest rates to achieve the sole economic goal of ultra-low inflation, interest rates would not be going up today,' Jim Anderton said.


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