This morning (Tuesday, 5th July) Australia鈥檚 central bank raised interest rates for the third consecutive month and indicated that more rate rises are to come as it battles to control surging inflation.
The latest increase pushed the rate up by 50 basis points to 1.35%, marking a cumulative increase of 125 basis points since May 鈥� the fastest fluctuation in rates since 1994.
Responding to the rise in interest rates Master Builders Australia鈥檚 CEO Denita Wawn said: 鈥淭he Reserve Bank鈥檚 decision to further increase interest rates is more evidence of the need for monetary policy to return to more normalised settings to combat inflation.鈥�
鈥淗owever, while acknowledging the need to tackle the dire effects of inflation, we are concerned that a continuing regime of steep rate rises risks turning the economic dial too far in the opposition direction and stalling economic growth needed to for the continuing recovery from Covid,鈥� she said.
鈥淭ime should be given to observe the impact of the monetary policy changes in the economy.鈥�
Wawn said that Australia鈥檚 construction industry has been largely responsible for underpinning the country鈥檚 recovery from the economic effects of the pandemic and that any suppression of construction activity would adversely affect the country's economy.
鈥淥ur industry is disproportionately affected by interest rises and a hard economic landing would put at risk the viability of many building and construction businesses who have managed to come through the pandemic but whose resilience has been eroded by severe supply chain pressures. Many now lack the resilience to withstand more sharp economic shocks,鈥� she said.
鈥淭oday鈥檚 decision reinforces the need for the federal government to ensure that its fiscal policies 鈥� indeed all economic levers 鈥� must be tested against their ability to drive down inflation and increase productivity,鈥� added Wawn.
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