Continuing RBA rate rises 'will grind Australia to a halt'

Consumer spending will fall dramatically and Australia’s economy will grind to a halt if the Reserve Bank (RBA) continues to raise official interest rates, an expert has warned.

Herston Economics chief economist Clifford Bennett told the AAP that a growing number of Australian families will struggle with debt problems if rates reach five per cent by the end of the year.

The RBA’s hike put the official cash rate at 4.25 per cent this week. There have now been five official interest rate rises since October last year.

"We’re seeing in the Sydney press examples of them [families] having to choose between buying groceries and paying their electricity bill and the added burden from the RBA is completely unwarranted, unnecessary and unwanted," said Mr Bennett. Aussies may be inclined to carefully compare credit cards and other borrowing options if repayment costs keep rising.

Announcing the rate increase on Tuesday (April 6th), RBA governor Glenn Stevens said the move was a necessary response to expansionary pressures on the economy.

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