Business welcomes interest rates decision

5 April 2011

The State’s leading business membership organisation, Business SA, welcomed today’s decision by the Reserve Bank Board to maintain official interest rates at 4.75 per cent.

Business SA Chief Executive Officer, Peter Vaughan, said that interest rates must remain on hold.

“We expected interest rates to remain on hold and we can see no justification for them to rise in the coming months,” Mr Vaughan said.

“Local businesses remain under pressure and last week’s retail trade data revealed South Australia’s fourth decline in retail trade over the past five months.

“Our local unemployment rate remains the highest in the nation and any rise in interest rates will be a major blow to the many small businesses throughout the State.

“We are experiencing a two speed economy and using interest rates to cool off the eastern states and the mining sector will have a devastating effect on our local business community.

“Households and businesses are feeling the impact of higher petrol, fresh food and electricity prices which is having a direct impact on consumer confidence.

“The Reserve Bank will be well aware that any rate rises will significantly increase the pressure on the economy, particularly given the excessive rate increases the major banks passed on in November.

“With no justification for interest rate rises in the short term, any move by the banks to independently raise their interest rates, should be out of the question.”