SA: Opposition fears impact of further rate hike

AAP General News (Australia)
04-04-2008
SA: Opposition fears impact of further rate hike

ADELAIDE, April 4 AAP - The federal opposition would be concerned if the Reserve Bank
moved to lift interest rates higher, Opposition Leader Brendan Nelson says.

Dr Nelson said the opposition feared that Australia's southern states might suffer
a "hard landing" in the wake of the current global credit squeeze.

The Liberal leader acknowledged the Reserve Bank had an obligation to use interest
rates to contain inflation.

"But it also has the responsibility to deliver full employment, to keep the currency
stable and to work for the economic welfare of Australia and Australians," he told a Liberal
Party lunch in Adelaide.

"From our perspective, we would be very concerned to see the Reserve going any further
than it has in recent times."

Dr Nelson's comments followed remarks from the Reserve Bank Governor Glenn Stevens
today indicating that home buyers could expect no immediate relief, with interest rates
to stay high to keep inflation under control.

Mr Stevens told a hearing of parliament's economic committee in Sydney that if the
central bank had not responded to signs of higher inflation, interest rates would end
up climbing further.

"At this point in time, we need tight policy to put downward pressure on inflation," he said.

"If you don't control inflation now, ultimately you end up with higher interest rates."

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KEYWORD: RBA NELSON

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