The committee slammed banks for failing to pass on cuts to the official cash rate to their floating and fixed term mortgage rates last month, and accused of undermining the central bank's efforts to loosen monetary policy. Since then, the government softened its stance on mortgage rates after the major banks defended their positions, and the FEC today backed down on threats to launch an inquiry into banking practices.
"Thousands of New Zealand homeowners, businesses, farmers and exporters have every reason to ask why Parliament's watchdog on the economy is by a majority vote choosing to stay muzzled," said Labour Party finance spokesman David Cunliffe in a statement. "Bizarrely, National, ACT and Maori Party, voted against our committee's inquiry after every indication that this would proceed."
Central bank Governor Alan Bollard held the OCR at a record-low 2.5% last month, and reiterated his concerns over the lack of movement by banks in passing on cuts to interest rates.
The committee also decided by majority against initiating an inquiry into the relationship between the OCR and short-term interest rates. The vote was held after a briefing from the Reserve Bank.
BNZ, ANZ National Bank, ASB Bank and Westpac were unavailable for comment at the time of reporting.
