Politicians and interest rates
Sunday, November 20th 2011, 10:02PM 
9 Comments
We received a letter from National Party leader John Key the other day intoning us to vote for his party this weekend. The first reason he said we should vote for his party was that it would "Lower mortgage rates, leaving more money in your pocket."
The second part is right, lower mortgage rates mean more money in your pocket. But the first is rubbish. The government doesn't set interest rates. We have an independent Reserve Bank and trading banks can do what they like with pricing. Secondly anyone with a basic understanding of economics knows interest rates are low when the economy is weak. Key promises a strong economy and low interest rates.
Does anyone else get annoyed with this misleading advertising?
| « | No need to jump to fixed: Westpac » |
Special Offers
Comments from our readers
On 21 November 2011 at 10:10 am another voting idiot said:
If JK had his way he would lead us to believe that he was also responsible for the GFC and CHCH Earthquake as well as he says these also are responsible for the lowest interest rates for years.. and only when he was in power... yeah right. On 21 November 2011 at 10:18 am Paul said:
I think what he means is if we can get our overall debt levels lower in the country, the rest of the world will see us as a more stable society and thus the interest rates we pay as a nation will drop, hence he is correct in what he is saying. If we're perceived as a highly indebted nation, the risks of investing in New Zealand rise and thus the interest rates we pay to people who lend us money will be high, and if we have low debt levels, the risk in investing in NZ is lower, thus our interest rates are lower. Look at Greece, Spain, Portugal, the risks are extremely high and their interest rates have sky rocketed, A strong economy and low debt levels will definitely see us paying lower interest rates. On 21 November 2011 at 10:20 am Jeff Lee said:
Yeah it's annoying but great to read your candid response! On 21 November 2011 at 10:31 am Duncan Dunbar said:
Actually that is not altogether true weak economy and low interest rates, if the market is responding to supply demand then the banks need to respond with competitive rates.
We had a very strong economy (World economy as well) a few years back which had interest rates being very competitive. Yes the Govenment doesn't set interest rates, however, people in power can influence them remember Keating.
Whoever wrote that article is obviously left centre left and measures via gross generalisations (like I just did)
Kind regards
Duncan
On 21 November 2011 at 11:21 am Alain Liger said:
Instead of saying what he says, why not publish his letter so that we can make our own mind withour your lecturing. On 21 November 2011 at 11:47 am Philip said:
Thanks for the comments. Sorry AL not trying to lecture, just wanted to point out that government's don't set interest rates (except maybe the likes of Muldoon).
Paul is right about the international markets, thankfully govt debt in NZ is relatively small compare to other countries.
DD yes there are lots of factors but most commentary we hear about the central bank and the OCR is that it brings the rates down to spur economic activity when times are tough
On 21 November 2011 at 5:15 pm Dallas said:
I went into a mortgage 6 years ago and was paying just under 8%. (Labour was the government of the day).
I am now on a very competitive rate of 5.60% which is saving me $300.00 per fortnight. (National led).
I am one of those middle income earners and the difference in interest rates are very significant. Yes I would be foolish to think I will stay on 5.5%, but am enjoying it as long as I can.
On 21 November 2011 at 9:01 pm John said:
I also find comments like this unhelpful just like his comments about the rating companies saying Labour in power would be mean a credit downgrade. On 22 November 2011 at 7:01 am Philip said:
John, I assume the his you refer to is John Key? Commenting is closed
|
|
Printable version |
|
Email to a friend |
