Raising interest rates 'will reduce consumer confidence'

Friday 08 July 2011

Article by Mozo

If the Reserve Bank of Australia (RBA) raises interest rates soon, the effect could be a downturn in consumer confidence, according to building materials manufacturer CSR.

Interest hikes 'will negatively affect consumer confidence'

Earlier this week, the RBA opted to keep the cash rate at the 4.75 per cent level set in November 2010, marking the eighth consecutive month in which there was no change.

Rob Sindel, managing director of CSR, observed that the current economic climate is "quite uncertain", reports the Australian.

"The issue is clearly … consumer confidence. Another interest rate rise says house prices are going to fall. People don't know what is going to happen," he said after the firm's annual meeting in Melbourne earlier today (July 7th 2011).

He asserted that many Aussies are expecting the cost of their properties to drop by a further two or three per cent.

Mr Sindel said he did not believe another hike in interest rates was a necessary step for the central bank to take.

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