May 9, 2008

Government Desperate For Interest Rate Cut

Trans-Tasman also agrees with our interpretation of the PM's comments on interest rates from earlier in the week

If there was a powerful political imperative in the Govt’s actions this week on transport costs, there was an equally powerful economic logic. The Govt is desperate for the Reserve Bank to begin cutting interest rates. The trading banks, hit by the international credit crunch, are raising mortgage rates well above the normal margin on the OCR. Where in the normal course of events, there’s sometimes a “nudge, nudge, wink, wink” over monetary policy, this was almost a shout across Bowen Street from the Beehive.

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