Hon Bill English MP
National Party Deputy Finance Spokesman
28 September 2006

Cullen sends shot across Bollard’s bow

National Deputy Finance spokesman Bill English says Michael Cullen has sent a shot across Reserve Bank Governor Alan Bollard’s bow over the prospect of interest rate rises ahead of the next election.

During in an interview in London with Bloomberg newswire, Dr Cullen said the Reserve Bank won’t raise interest rates again, though it may not cut them until 2008.

‘The general consensus is that rates will not be raised, but that the beginning of the easing part of the cycle has been pushed off further into next year, possibly even into early 2008,’ Dr Cullen said. ‘I think that’s really what the bank was saying.’

“Dr Cullen is desperate that Dr Bollard not raise rates ahead of the 2008 election, because such a hike would hurt Labour’s re-election chances,” says Mr English.

“So he has delivered a strong message to Dr Bollard that he shouldn’t be thinking about raising interest rates.

“But Dr Cullen should be mindful of Dr Bollard’s independent position.

“It is Dr Bollard - not the Finance Minister – who decides whether to raise rates, hold them, or lower them.

“Otherwise why bother having an independent Reserve Bank Governor? Dr Cullen should respect the independence of the position.”

ENDS

© Scoop Media