Bill English MP
National Party Finance Spokesman

24 July 2008

Interest rates: The good news is the bad news

National Party Finance spokesman Bill English says “the good news is the bad news” when it comes to today’s Reserve Bank decision to cut interest rates.

“Homeowners will welcome any relief, but rising living costs and the high price attached to international credit will probably eat up any advantage.

“Worryingly, the decision to cut interest rates is a reflection of the fact that the economy has not grown all year. Unemployment is now likely to become a bigger issue.”

Mr English fears that the Reserve Bank update will be used by Labour as a cue to start making big spending promises.

“With Labour looking desperately to win the next election, New Zealanders should know that reckless pork barrel spending now is likely to put the next round of interest rate cuts at risk.

“It has been five years since the last rate cut. It might have happened sooner if Michael Cullen had managed to halt Labour's lollynomics.

“We know that in 2007, Michael Cullen sacrificed interest rates so his colleagues could go on a massive spending spree. He warned that decision would keep interest rates higher for longer.

“With growth going backwards, now is not the time to be writing big cheques at householders’ expense for gimmicky pet projects that don’t deliver a stronger economy.”

ENDS

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