Bank's Call Protects Jobs, Chamber Says
Newcastle Herald
Thursday April 7, 2005
THE Hunter's business community welcomed the Reserve Bank's decision to leave interest rates unchanged yesterday, saying a rise would have hurt employment.
Business leaders had expected the bank to announce another 0.25 percentage point rise after putting up official rates in March. The bank has left interest rates at 5.5 per cent as key economic indicators suggest the economy is slowing.Hunter Business Chamber president Kyle Loades said other influences had slowed the economy and a further rate rise would have threatened employment.Companies involved in the construction, retail, automobile and manufacturing sectors would have been hit hard by a rate increase.Mr Loades said the rising cost of petrol, recent state taxes on housing and land combined with a slowing in retail spending over the past few months had supported the central bank's decision.He said business confidence would have been affected by a rate increase."Interest rates affect both costs and income for many businesses," Mr Loades said."Not only would an increase in rates reduce spending by customers, the cost of products would inevitably rise."At the same time an increase usually puts on hold the creation of many jobs."Housing Industry Association chief economist Simon Tennent said households were sensitive to higher loan repayments."With the housing industry already 12 months into an orderly slowdown and price pressures easing in many real estate markets, the rates-on-hold scenario is appropriate and correct for this point in the economic cycle."Newcastle MP Sharon Grierson said the decision was a welcome respite for the 26.9 per cent of Newcastle households with a mortgage."In the past month we saw interest rates increase, private health insurance premiums increase, petrol prices increase and unemployment in the region increase by 2 per cent," Ms Grierson said.
© 2005 Newcastle Herald
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