Pre-poll Rate Rise Back On Cards
The Age
Saturday June 30, 2007
AN INTEREST rate rise before the federal election has become more likely, despite a consensus that it probably will not happen until next year.
In The Age's twice-yearly economic survey, eight of the 21 leading economists surveyed expected a rise by year's end. A pre-election rise would damage the Government, which campaigned before the last election on its ability to keep interest rates lower than Labor.It would be the fifth rise since the 2004 election, and the ninth consecutive rise since May 2002.The Age survey reveals a dramatic change from the survey six months ago, when just two economists were tipping a rate rise by the end of this year. Even those still tipping no increase expect it to be a close call. By this time next year, rates are likely to be higher, with 17 expecting at least one increase. "This survey shows the vast majority of economists have joined Reserve Bank governor Glenn Stevens in forecasting higher inflation in the pipeline," Labor's treasury spokesman Wayne Swan said. A spokesman for Prime Minister John Howard said: "Interest rates will always remain lower under a Coalition government than under Labor." NAB chief economist Alan Oster said there was a 40 per cent chance of a rate rise this year. "There is no doubt that the outlook for 2008 has deteriorated," he said. ? Household debt to the banks has topped $1 trillion for the first time. The Reserve Bank reports that credit extended to individuals by financial institutions jumped by $10 billion last month, lifting the total amount owed to them to $1001 billion.
© 2007 The Age
