The Housing Industry Association (HIA) has warned the Reserve Bank not to raise the official cash rate when it meets next Tuesday.
According to HIA’s senior economist Ben Phillips, Australians are already struggling under high rents and property prices and higher interest rates would only serve to exacerbate the problem.
“Supply side constraints are continuing to place undue pressure on housing rents and home values, especially but not solely in Australia’s capital cities. Reducing the obstacles to boosting Australia’s housing supply is a fundamental policy challenge, and a challenge that becomes harder if interest rates are taken too high,” Mr Phillips said.
“With both the headline and the Reserve Bank measures of annualised inflation moving in the Reserve Bank’s ‘comfort zone’ of 2 to 3 per cent, bold increases in interest rates would likely prove counter-productive for the Australian economy, stifling private business investment at what is still a fragile.”
Over the December quarter, inflation recorded only a small movement upwards to be just 2.1 per cent ahead of the same period 12 months ago.