RBA makes smart call
2 February
Statement by David Goodwin
The decision by the Reserve Bank of Australia to keep interest rates on hold is the right decision for a Queensland economy which is lagging the national recovery.
With further interest rate increases almost certain across 2010 Chamber of Commerce & Industry Queensland (CCIQ) is cautioning the Reserve Bank to fully take into account regional interests in considering interest rate rises.
When the Reserve Bank comes to decide what to do on rates in the future, it should think about ensuring that growth in regional areas such as Queensland continues to improve and not only consider their desire to cool things off in major metropolitan areas.
As a constraint on business interest rates has steadily risen from the 16th largest constraint for Queensland businesses at the beginning of 2009 to now being the fifth largest. And it is little wonder as each of the last three 25 basis point increases in interest rates has cost the Queensland business community 360 million.
In our view monetary stimulus must continue to be withdrawn 'gradually' and RBA's monetary policy settings are very close to now being within a more 'normal range' if not already there.
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