By VERNON SMALL deputy political editor
Labour has headed off any more "jawboning" of the Reserve Bank by Acting Prime Minister Jim Anderton, issuing a swift "no comment" on news yesterday that bank Governor Dr Don Brash had pushed up interest rates.
Within minutes of the bank's announcing a 25-point rise to 6 per cent in the official cash rate, Associate Finance Minister Trevor Mallard issued a one-paragraph statement saying the Government had no comment to make on the bank's move to curb rising inflation.
Sources said the statement was prompted by Finance Minister Michael Cullen's concerns that Mr Anderton would repeat the call he made on Monday for the independent central bank to hold interest rates.
Interest rates have now risen 1.5 per cent over the past five months and are tipped to climb further.
The bad news for those with mortgages is that many economists believe rates will rise a further 1 per cent before the year is out.
Dr Cullen returns this morning from a tour of New York and Japan, where he spoke to investors and rating agencies.
Mr Anderton had said on Monday that he was confident wisdom would prevail at the bank. He pointed out that under the new policy targets agreement Dr Brash was required to avoid unnecessary instability in output and interest rates.
He said an official cash rate rise would reduce employment and pull back urgently needed economic growth. "I hope that on Wednesday we will see the first signs of the constructive contribution that change will make to jobs and economic development."
However, he declined further comment yesterday, although a spokesman rejected National Party claims that he had been muzzled.
"Mr Anderton's views on the interest rate issue are well known. As Dr Cullen said yesterday, under the Reserve Bank Act the interest rate is a matter for the Governor's judgment and he is accountable for it in terms of the consequences which follow," the spokesman said.
National's finance spokesman, Bill English, said the Government had "muzzled" the Alliance leader.
He said Mr Mallard's statement was an attempt to paper over cracks appearing in the Government's economic policy as Mr Anderton tried to build Alliance support.
"He has watched support for the Alliance drop to record lows because his supporters expected him to do something when he got into Government and he's done nothing," Mr English said.
Mr Anderton withheld criticism when the bank raised interest rates in January, although Dr Cullen questioned the bank's timing and the accuracy of its forecasting.
At the time, Dr Cullen defended his right to criticise the bank, saying he was not undermining its independence. But negative responses from overseas seem to have convinced him that public attacks on the bank undermine international confidence.
Labour draws blinds on criticism of bank
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