RBNZ comments show why the Government must cap council rates now

The Taxpayers' Union says Wednesday's decision by the Reserve Bank to hold the Official Cash Rate at 2.25 percent shows inflation remains a serious problem and further interest rate relief is highly unlikely.

Taxpayers' Union spokesman, James Ross, said:

"Today's decision makes it clear inflation pressures haven't gone away. Too much of that pressure is coming from sectors the Government has influence over. Electricity prices surged 12.2 percent, the largest increase since 1989, while local authority rates rose 8.8 percent. When power bills and council rates are rising steeply, monetary policy forces a rise in interest rates to combat the resulting inflation."

"Allowing council rates to rise year after year well above inflation directly feeds into the CPI and makes the Reserve Bank's job harder. If the Government is serious about supporting lower interest rates, it must rein in runaway council spending and cap rates now."

"Further, shifting billions from one programme to another is not real savings, and spending in both nominal and real terms remains higher than under the previous Government. Persistent deficits mean continued borrowing, leaving New Zealand more exposed to global interest rates and rising debt servicing costs."

"If the Minister of Finance wants durable interest rate relief, she must match monetary policy with genuine fiscal restraint. That includes capping council rates now. Budget 2026 will show whether the Government is prepared to make the tough calls needed to reduce expenditure, help get inflation under control and secure sustainable growth."