Rate rise takes us back to reality

“Today's announcement of a 25-basis point increase in interest rates is the sound of reality returning to the New Zealand economy,” says ACT Leader David Seymour.

“Our approach to COVID for the past 18-months has been based on two natural advantages, isolation and cheap money.

“Inevitably interest rates have to return to normal. The value of a dollar in your pocket, has to match the value of a dollar printed by the Reserve Bank. You can’t sustainably borrow for less than people will lend, and nobody will lend for a quarter of a per cent.

“When the cost of borrowing money comes back to the price people expect for lending it, we're going to see the costs, not only of mortgages, but also government debt, increasing. This is a this is a wakeup call for the public and private sector.

“The Government and its economic policies will have to be focused on growth, rather than redistribution.”