A rise in interest rates is being predicted for this week.
According to press reports, the Reserve Bank will lift official cash rates to 5 per cent, the first rise since 1994.
Prominent business pressure groups are against any increase. The NSW Chamber of Commerce is opposed to a rise, as is the Australian Chamber of Commerce and Industry. The ACCI chief executive, Mark Paterson, is quoted today as saying “the Australian economy is moving along very nicely. Why would anyone want to slow it down?”
Interest rate increases could have significant political consequences for the federal government. In the 1998 Federal election, voters in the eastern suburbs of Melbourne and similar areas interstate stayed with the Liberals, ensuring Howard’s re-election. It is these areas that react most to interest rates.
