The Reserve Bank of Australia\’s decision to put interest rates on hold should be seen as an encouraging sign, Opposition Leader Malcolm Turnbull says.
The central bank has maintained the cash rate at three per cent – a 49-year low – after cutting it by 25 basis points in April.
Mr Turnbull said it was heartening the Reserve Bank was seeing signs of economic recovery. “It\’s a cautious statement.
They\’re seeing signs of recovery around the world,\’ Mr Turnbull told reporters in Sydney.
“They particularly identified signs of growth in China, which is obviously very important to us, and so they\’ve … got a steady as she goes policy and they\’ve held rates steady, and that should be seen as an encouraging sign by Australians.”
Unemployment would be higher without stimulus: Swan
Treasurer Wayne Swan says unemployment would be a lot higher if not for efforts to stimulate the economy undertaken by the government and the Reserve Bank of Australia (RBA).
“The stimulus so far has been responsible for supporting jobs in the Australian community,” Mr Swan told reporters in Canberra.
“I think it would be pretty fair to say if it wasn\’t for the economic stimulus in the system, the impact of monetary policy so far, we would be seeing unemployment rates much higher than they are now.”
Official data on Thursday could see the jobless rate touch six per cent, economists say.
The unemployment rate as of March was 5.7 per cent, up from 3.9 per cent in February 2008.
Mr Swan said retail banks had passed on 385 basis points of the RBA\’s 425 basis points of cuts. “The banks did not pass through in full the last rate cut,” Mr Swan said.
“I made the government\’s position very clear and my position very clear that I would have liked to have seen full pass through in a timely way,” he said.
“That didn\’t happen and that is regrettable.” He wouldn\’t speculate on whether the central bank would cut rates again.
Steady interest rates \’not sustainable\’
Business believes the Reserve Bank must cut interest rates in the months ahead after leaving them unchanged at 3.0 per cent today – a 49-year low – after cutting it by 25 basis points in April.
The Australian Chamber of Commerce and Industry (ACCI) says the RBA stayed on the sidelines to assess the impact of the federal government\’s second stimulus package and next Tuesday\’s budget.
“However, we don\’t believe it is a sustainable position,” ACCI director of industry policy and economics Greg Evans told reporters in Canberra.
Further deterioration in employment and business investment was expected, and business needed the benefit of further rate reductions during the next three to six months.
“Businesses missed out on a lot of the official easing in interest rates … a lot of that is only still being passed on in half to Australian business,” Mr Evans said.
Many small businesses were still paying 10 per cent interest on their overdraft.