Interest rates news 'is bad for businesses'

Although many economists were unsurprised by the Reserve Bank of Australia's (RBA) decision not to lower interest rates, the news has drawn criticism from certain quarters.

Bosses at the Housing Industry Association (HIA) believe the RBA has missed a golden opportunity to restore confidence in the business banking sector.

Many companies with expansion aspirations have been wary about taking on loans because they fear that lenders will hike their interest rates.

Senior economist at the HIA Andrew Harvey said that other than the mining sector, there has been little growth in the Australian economy and the time is right for further interest rate reductions.

He added that the RBA will come under increasing pressure to enforce at least one cut in the next few months.

"Given the current global and domestic economic conditions a rate cut today would have been the appropriate call, but regrettably the Reserve Bank Board did not take that decision," Mr Harvey remarked.

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