Extract of Interview by Peter Hendy, Chief Executive – SBS World News Bulletin – Wednesday 4 February, 2004. Australian interest rates have been kept on hold. But even as the housing industry, business and consumers breath a collective sigh of relief, speculation has started about when the Reserve Bank will next move to lift rates. On the floor of the ANZ dealing room and the other three major banks, they’d been predicting a different outcome – that interest rates would lift 25 basis points. The Reserve Bank’s decision to keep rates steady at 5.25% may just be temporary. David De Garis, ANZ Senior Economist There’ll be a lot of speculation now about whether the Reserve Bank will increase rates next month or whether we’re close to, or at the top of the interest rate cycle right now. The RBA didn’t publish its reasons for sticking to the status quo – an indication will come next Monday. Today’s decision may be an acknowledgement of the sensitivity of the economy to interest rate shifts. David De Garis. The Reserve Bank now gets a lot of effect for small changes in monetary policy. Real Estate Agent Antony Woodley knows only too well what happened as a result of the last two rises when first-home buyers and investors deserted the market. Antony Woodley, Collins Sims Real Estate I would like to see other figures come into play before they use housing as the ultimate driver to change interest rates. Business is also relieved at the Reserve’s decision not to make a move, pointing to inflation being under control. Peter Hendy, Australian Chamber of Commerce & Industry: We thought the rise in interest rates in November was questionable, we thought the rise in December was questionable and we think it’s very questionable whether there should be any rise in the near future. Credit watch groups are worried by consumers’ appetite for borrowing. Carolyn Bond, Consumer Credit Legal Service Australians are more committed now than they ever have been, many are really at their limit. Retail sales surged above $20 billion in December for the first time ever. But the Bureau of Statistics says when seasonally adjusted, the figures actually weakened.
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