Economists note interest rates higher under National

"More economists are acknowledging the risk of higher interest rates due to National's tax policy," said Peter Conway, CTU economist, today.Deutsche Bank chief economist, Ulf Schoefisch, said today that official interest rates could be cut from 6.75% to 5.5% from the middle of next year. But he also said that, 'Without the boost from National's tax cuts, rates could move slightly lower, perhaps to 5% under Labour's tax changes.'

"This 0.5% difference would cost householders an extra $15 a week on mortgage interest repayments," Peter Conway said.

Yesterday John Edwards of HSBC said that, 'It must be a considerable annoyance for Dr Bollard that the biggest tax cuts are promised by his predecessor, National Party Leader Don Brash, who has also expressed regret that the RBNZ inflation target is not as confining as it was when he was governor. Dr Brashs tax cuts combined with a more restrictive policy targets agreement would leave only one direction for New Zealand cash.'

"There are many downside risks to National's proposed tax cuts including higher mortgage payments, cuts in public services, and higher public debt," Peter Conway concluded.