RBA leaves interest rates unchanged

01/02/11

The Coalition welcomes today’s decision by the Reserve Bank to leave official interest rates unchanged at 4.75%.

The Coalition urges the banks to follow the Reserve Bank’s lead, and to leave the interest rates they charge to home buyers and businesses, particularly small business, at current levels.

This will provide a welcome respite for households and businesses already struggling from higher cost of living pressures from rising prices for electricity, gas, water, fruit and vegetables.

In its statement today the Reserve Bank observes that the rebuilding and replacement of infrastructure and housing destroyed or damaged by the recent floods will add modestly to the demand-pressures in the economy.

The RBA warns that the precise effect will depend on “the extent to which other public and private spending is deferred”.

This supports the Coalition’s calls for spending restraint by the Gillard Government.  The Reserve Bank has sent a clear message that failure to do so will lead to higher interest rates.