Mortgages would be much higher if Brash was governor

While many Kiwi families with mortgages will be dismayed at today's interest rate rise, there is at least some comfort in knowing that housing costs would have been much higher had Don Brash still been governor of the Reserve Bank, and National still in government, says Progressive MP Matt Robson.

"Had Don Brash been governor pursuing National's early 1990s annual inflation target of zero to 2%, interest rates would currently be up to one percentage point higher than they are - floating home mortgages would now be over 9.75%.

"Instead of having one of the fastest growing economies in the world, we would instead have much slower growth and many more in welfare. The Reserve Bank would be permanently maintaining a higher interest rate structure to deliver National's artificially low inflation target year-in and year-out," Matt Robson said.

One of the first things the progressive government elected in 1999 did was to instruct the Reserve Bank to better take into account New Zealand's long-term economic and social development interests when making decisions on interest rates.

These days, the Reserve Bank aims to keep annual inflation within a range of 1% to 3% over economic cycles.

The last time we had a National government (1990-1996) and Don Brash was governor, the Reserve Bank aimed to keep the annual inflation rate within an arbitrarily low zero to 2% each and every year - which pushed interest rates higher than they needed to be on a semi-permanent basis.

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