October 6th 2009
Rate rise will cost jobs locally
At its meeting today, the Reserve Bank Board decided to raise the cash rate by 25 basis points, to 3.25 per cent from their lowest-ever point, amid signs of a strong National economic recovery. However, according to a north Queensland based economist, Mr Colin Dwyer, Townsville and much of North Queensland are on a different economic setting to the national one. As North Queensland tries to manage its way out of recession, multiple interest rate rises will create more job losses and underemployment in North Queensland.
The official cash rate had plunged to a 49-year low of 3 per cent, a setting that RBA Governor Glenn Stevens has called an "emergency rate".
There's growing economic evidence that the national emergency is over. Last week's better-than-expected retail sales figures from the ABS and yesterday, ANZ job advertisements rose 4.4 per cent in September. Also, house prices nationally have risen.
DS Economics principal Economist Colin Dwyer said, “However, Townsville and much of North Queensland are on a different economic setting to the national one. North Queensland including Townsville and Cairns has experienced patchy job advert conditions. Median house prices have fallen rather than risen in line with national experience. Business and consumer confidence, while stable, has not bounced back to pre GFC levels."
Commenting before the Reserve Bank's announcement, Colin Dwyer said, "If not today then the case for a rate rise will firm for November and it won’t stop there.
"Rising interest rates will be devastating for our Northern economies, as we manage our way out of recession. It will reduce business investment, reduce consumer and business confidence, reduce retail spending, postpone home purchases and lead to job losses and underemployment. This is a concern for every household in North Queensland.
"I expect the RBA to execute a series of rate rises over the coming months. A cumulative 2.0% rise, which is expected by 2011, will hurt a significant number of North Queenslanders.” he said.
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