Reserve Bank warns of difficult conditions

The Reserve Bank has warned the Government it is facing "particularly difficult" conditions.

In its briefing papers on monetary policy to Finance Minister Michael Cullen, released today, it says it is not confident inflationary pressures will ease in the near future and further interest rate rises cannot be ruled out.

Dr Cullen said the briefing papers made sobering reading and reinforced the need for the Government to maintain a prudent fiscal stance.

"Certainly, large across-the-board tax cuts of the kind National campaigned on would be explosive and irresponsible in the extreme," he said.

- NZPA