Current at: 06 May 2008
The HIA welcomes today’s Reserve Bank announcement that official interest rates will remain on hold in May. There is need to provide both investor and consumer confidence to improve issues such as housing affordability and stability or downward movement in interest rates is essential in this regard.
HIA’s Chief Executive - Policy, Mr Chris Lamont, said that it was important that the Federal Government focus on policies to keep downward pressure on interest rates.
“Recent CPI figures demonstrated that much of Australia’s inflation problems stem from international influences such as booming demand in China and domestic capacity constraints such as skills and housing shortages,” said Chris Lamont.
Recent rate rises have already resulted in a slowing of the Australian economy as evidenced by very low consumer confidence, poor housing starts, and a slowdown in retail spending.
“More investment in skills training, infrastructure and affordable accommodation is necessary, however, rate rises are putting the breaks on this investment and ironically adding to cost of living pressures,” said Chris Lamont.
Australia
’s interest rates are now among the highest in the developed world. Further rate hikes will only serve to further choke growth in the economy by hitting those households who can least afford it.
“Recent CPI figures have confirmed that much of Australia’s recent inflationary pressures arises from international influences such as the growth of China, international fuel and commodity price movements. Targeted investment in capacity building elements of the Australian economy is what the nation needs to reduce cost of living pressures,” Chris Lamont said.