RBA urged to halt rate rises

Tuesday 20 April 2010

Article by Mozo

The Reserve Bank (RBA) should slow its current policy of raising official interest rates, it has been argued.

Home loan expert John Symond told the AAP that the RBA has ignored its own advice, contained in the minutes of its March 3rd meeting, that "it remained appropriate for interest rates to move gradually towards normal levels".

Referring to the possibility of another rate hike in May, he said: "That will make six increases out of seven meetings. Six out of seven isn’t the definition of gradual [increases], so I would urge the RBA to be very cautious."

Mr Symond noted that consecutive rate rises have already led to a fall in consumer spending and mortgage demand, which has affected the decision of Aussies who choose to compare credit cards and other loan products.

He added that there are many signals that the economy is set to slow down, which should encourage the RBA to show caution.

Earlier this month, the RBA raised the official cash rate by 25 basis points to 4.25 per cent.

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