Rate rise to hit business and consumer confidence

2 March 2010

The State’s leading business membership organisation, Business SA, responded to today’s decision by the Reserve Bank Board of Australia to increase official interest rates to 4.00 per cent.

Business SA Chief Executive Officer, Peter Vaughan, said that this latest rate rise would hit rising confidence levels.

“Businesses and consumers will certainly feel the full effect of this interest rate rise,” Mr Vaughan said.

“Rate rises affect everyone across the board and again this is like using a sledgehammer to crack nuts.

“While there are early signs of economic recovery, it is essential to maintain momentum and increase business and consumer confidence levels.

“Many businesses across South Australia remain under pressure and the previous rate rises before Christmas certainly halted emerging confidence.

“March is a very important month for the local economy and this decision by the Reserve Bank will do nothing to encourage consumer spending.

“The banks need no encouragement to raise interest rates and this rate rise will put a dent in the fragile economic recovery.

“Further interest rate rises in the coming months have the potential to reverse the measures that have been implemented for businesses and families to get through the downturn.”

Ends.