Unions are desperate to see interest rate cuts

Two of the country's leading unions have called for interest rates to be lowered by the Reserve Bank of Australia (RBA).

The RBA's board members are set to meet tomorrow (October 2nd) to discuss whether the existing national cash rate is adequate.

Currently, official interest rates stand at 3.5 per cent, having come down from 4.75 per cent since November 2011.

Despite the significant drop over the past 11 months or so, a number of organisations in the construction and manufacturing sectors feel that rates are still too high.

The RBA has not made any changes since June 2012, but the pressure is mounting and there is every chance that another cut will be made this week.

Speaking to the Australian Associated Press, leaders of the Construction, Forestry, Mining and Energy Union CFMEU and Australian Council of Trade Unions (ACTU) suggested that urgent action is needed to give struggling businesses a much-needed boost.

CFMEU secretary Michael O'Connor believes the union's pleas for lower rates have been ignored up until now.

"For too many months now they [the RBA] have sat on their hands whilst jobs were lost and industries suffered," he was quoted as saying.

"Construction and manufacturing are in a parlous state … they're telling us they need a rate cut," Mr O'Connor continued.

The CFMEU representative feels that the cash rate should be trimmed by another 50 points in order to stimulate activity in both of these sectors.

ACTU secretary Dave Oliver agreed, stating that any relief provided by the RBA would be more than welcome.

Of course, the two unions are not the only organisations that are keen to see further reductions.

The Housing Industry Association has long campaigned for lower rates, claiming that the property market will continue to struggle unless buyers are given more incentive to purchase a new home.

It will be interesting to see whether the RBA board members succumb to this pressure when details of the monthly gathering are revealed later this week.

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