Government Rejects Putting Pressure on Rates
Federal Trade Minister Craig Emerson has rejected suggestions the government is putting upward pressure on interest rates.
Mr Emerson was responding to claims by Opposition Leader Tony Abbott that the government's borrowing to cover its spending promises was impacting rates. Dr Emerson said the claim was "astonishing" given that the cash rate was 6.75 percent when Labor took office and was now 3.25 percent.
Mr Abbott said a cut to interest rates would be helpful to those with home loans and business borrowers, but considered a further cut by the RBA would be a sign of general weakness in the economy. "Cutting interests rates would be helpful. But it would be a sign of the Reserve Bank's fundamental angst about the state of the local and international economy," he said.
Dr Emerson said bringing the federal budget back to surplus in 2012/13 would give the RBA room to further cut interest rates if it chose to do so.