Three political parties -Labour, the Greens and the Progressive Party - are banding together to launch their own inquiry into the relationship between the official cash rate and short term interest rates after Parliament's Finance and Expenditure Select Committee decided against a similar inquiry several weeks ago.
"Kiwis believe they are paying higher interest rates than they should be paying," Labour finance spokesperson David Cunliffe says. "Banks believe interest costs are justified. The facts should be put on the table fairly and openly so that people can see whether they are receiving a fair deal,"
The NZBA has released a statement saying it is yet to receive "full clarity around the nature, scope and merit" of the proposed inquiry.
"Each bank will be making its own decision on the extent, if any, of participation in this review, while the association will canvass members as to what engagement, if any, it has on members' behalf," it says.
Green Party finance spokesperson Russel Norman believes there is an "immediate need" for such an inquiry and says the recent Reserve Bank report on Funding Costs and Margins highlighted the growing bank spreads, particularly for floating rate mortgages.
"It's time to stop playing cat and mouse with the banks. We need answers. As law and policy makers, we don't have the information to assess what's really happening with bank profitability, lending practice, or their exposure to risk. This enquiry will attempt to break that dangerous impasse," Norman says.
A spokesperson for finance minister Bill English says English believes an inquiry will achieve nothing and "is really just a meeting of opposition".
