14 Mar 2014

Govt says rates were higher under Labour

12:24 pm on 14 March 2014

The Government has rejected criticism it is to blame for interest rates rising and says rates were much higher under the previous Labour-led Government.

The Reserve Bank has lifted its benchmark interest rate from 2.5 percent to 2.75 percent, prompting Opposition warnings that firms will close and struggling households won't be able to cope.

It's a long way from double-digit interest rates, but Thursday's announcement is unsettling for households with hefty mortgages and an opportunity for Opposition politicians to criticise the Government's economic management.

But in Parliament, Economic Development Minister Steven Joyce said things were much worse under Labour.

Mr Joyce said a family with a $200,000 floating rate mortgage has been saving $200 a week compared with six years ago.