1 Jul 2009

Govt backs off inquiry into banks over interest rates

5:31 pm on 1 July 2009

The Government has backed off plans to hold an inquiry into the failure of banks to pass on interest rate cuts.

Parliament's finance and expenditure committee has decided not to hold the inquiry, although Labour Party MPs on the committee voted for it to proceed.

Committee chairman Craig Foss, a National MP, says after hearing from the Reserve Bank the committee voted by a majority to drop plans for the inquiry.

Mr Foss says an inquiry is just that - and the committee still has ways of monitoring interest rates.

He says it will keep a keen watch on future monetary policy statements and financial stability reports from the central bank.

But Labour's finance spokesperson David Cunliffe says the decision not to proceed is a backflip by National.

Mr Cunliffe says National MPs on the committee voted against Mr Foss' own terms of reference.