We broke the story first, writing "Are Kiwis paying a $1 billion per annum interest bill - which is set to rise to $2 billion per annum - to the Big Aussie Banks on top of their mortgages due to a government blunder? Could this story explode? It's a good one, so read on". Well, as expected, the story has exploded onto the front pages of the NZ Herald today - probably since some of their staffers read us - the more the better. We wrote several days ago:
"In 2020 when settlement balances were $7 billion, the OCR was 0.25 percent. Now it is 2% - which is the interest rate currently being paid on the $46 billion of commercial bank deposits at the RBNZ. That will amount to nearly $1 billion in interest over the next year. Since the OCR is forecast to rise .. then this bill is set to increase to $2 billion a year".
.. and the Herald says today, "The RBNZ is paying the banks interest at the OCR (which is rising) on these deposits. At 2%, the RBNZ is paying $940 million on the $47b of deposits".
What the Herald didn't want to say is that this billion dollar bill that is sinking the finances of NZ was caused by the Finance Minister & Reserve Bank embarking on an unnecessary, reckless money printing program. Although Grant Robertson will try to distance himself from this issue, the Beehive backed QE and even indemnified these billion dollar losses that are now occurring, stating in a 2020 Press Release:
"The Minister of Finance has signed a memorandum of understanding & letter of indemnity with the Reserve Bank to enable it to undertake a programme of large scale purchases of NZ Government bonds on the secondary market up to a value of $30 billion over the next 12 months, to reduce interest rates and inject money into the economy".
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