Investment News: 03 Mar 2010
The Reserve Bank of Australia's (RBA) decision to lift its key interest rate again is an "unwelcome headache" for business, a business lobby group says...
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The RBA raised the cash rate by 25 basis points to 4.0 per cent after Tuesday's monthly board meeting, a move expected by a majority of economists.
Australian Chamber of Commerce and Industry chief executive Peter Anderson said the economic recovery is uneven with parts of manufacturing and the services sector facing difficult trading conditions.
"For many in commercial property, tourism and hospitality, particularly in regional centres, the outlook remains subdued," Mr Anderson said in a statement.
"This rate hike will add to the pressures they are facing."
Australian Industry Group chief executive Heather Ridout said while the rate decision was a vote of confidence in the economy, it will be a setback for many businesses experiencing the impact of a higher Australian dollar and patchy demand.
"The simultaneous withdrawal of monetary and fiscal stimulus will certainly test, over the months ahead, whether economic recovery is self-sustained," Mrs Ridout said in a statement.
She said while there are encouraging signs of a recovery, overall conditions remain "fickle".
The rate rise was the fourth since October last year.
"The RBA has banked a percentage point in rate rises plus more if market rate increases are taken into account," she said.
"It should tread warily going forward as the death of the GFC may be greatly exaggerated."
Australian Retailers Association executive director Russell Zimmerman said retailers will feel let down by the rate decision just after what is traditionally the toughest month for consumers and retailers.
"February is always a hard time for families dealing with back to school costs, as well as credit card bills from Christmas, and an interest rate rise immediately after this time will now further add to this pressure," Mr Zimmerman said in a statement.
"Last month the RBA showed a wise and patient strategy by keeping interest rates on hold, but now it seems this approach has been replaced with a hasty decision and one that is out-of-touch with normal family financial cycles."
SOURCE: aap
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