Robertson confident interest rates will stay stable

Finance Minister Grant Robertson says he’s not immediately concerned interest rates will affect people’s abilities to pay their mortgages, but the Government is “keeping an eye” on global market directions.

At the finance and expenditure select committee yesterday, Robertson spoke to the crown accounts for the year to June 30, 2017, although those accounts were the work of the previous National-led Government.

Robertson said although private- sector debt is high, with household debt-to-disposable income at 167 per cent, due largely to house price growth, most forecasters don’t predict a rise in interest rates this year and perhaps not next year either.

“While we will always advise people to be cautious about the level of debt they take on, I’m confident interest rates will remain relatively stable in the near term,” he said. “At the margins, some people will face some pressure if interest rates go up, but none of the forecasts I’ve seen see that happening in the near future.”

Robertson said recent falls on the United States stock market had been expected for some time and acknowledged a global correction could see investor interest in New Zealand asset classes shift, but wouldn’t say if he foresaw further drops.

“There will be potentially be a transfer of the kinds of asset classes that people choose to invest in, and New Zealand needs to look out to the rest of the world and see if global growth is still strong,” he said.

Robertson was pushed by National MPs Steven Joyce and Andrew Bayly on conflicting comments on the country’s debt track when he was the opposition finance spokesman, when he criticised the country’s level of debt, compared with recent comments he has made as Finance Minister, where he has said the low level of public debt is helpful for the country’s economic strength.

The Finance Minister said he had been talking about debt as a percentage of GDP, not nominal net debt.

“My answer was around New Zealand relative to the world, and it’s absolutely true that our net debt is relatively low,” Robertson said. “In 2016, the level of core crown debt had reached 27.5 per cent, and at that time I did make the comment that we were running the risk of putting ourselves in a position where, should there be another earthquake, we would find ourselves in some difficulty.”

Bayly said that in February 2016, talking of debt for the December 2015 quarter, Robertson had made a specific comment about net debt growing to $60 billion, and Bayly couldn’t see how the minister reconciled that with his recent statements. — BusinessDesk