New Zealand First has warned of a potential interest rate explosion unless there are some fundamental changes to New Zealand’s monetary policy prescription.

“The Reserve Bank’s decision to increase the Official Cash Rate will dampen economic growth, reduce employment opportunities, and do precious little to exchange rates,” said New Zealand First Leader, Rt. Hon Winston Peters.

“This myopic focus on inflation at the expense of jobs, growth, and long-term prospects has to cease. The review of monetary policy must result in greater flexibility, broader targets, and the use of other policy tools besides interest rates. New Zealanders are being hit with higher mortgages, decreasing employment prospects and increases in the prices of such basic items as petrol.

“We need to immediately attend to our economic deficiencies by providing an export focus, developing an investment strategy (with the early setting up of a superannuation fund), and by making export, growth, and employment objectives part of the policy targets agreement between the government and the Governor of the Reserve Bank

“Without this action interest rates will explode and we will all be the worse for it,” Mr Peters said.

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