Double cut to interest rates urgently needed: Fraser

Treasurer Andrew Fraser has today called on the Reserve Bank to slash interest rates by half a percent next week to give struggling families a break.

Mr Fraser said the Reserve Bank needed to carry through immediately on its recent indications that the pattern of interest rates rises would come to an end to be replaced with a rates descent.

“In the Bligh Government’s view, this can’t come soon enough,” Mr Fraser said.

“And there are reams of economic data to support that view – high interest rates hit consumer confidence first and the stark evidence is in the latest retail trade figures which show a substantial decline of 0.6 per cent in the June quarter.

“When you combine high interest rates with other factors like rising petrol prices, consumer confidence is hit hard and discretionary spending by families is wiped out.

“The Reserve Bank has accomplished its job – inflation needed to be tackled but the job is now done and it’s time to relent and offer families some relief.”

Mr Fraser told State Parliament dwelling investment had also been hit hard by rates rises.

Over the year to the March, dwelling investment has declined 6.2 per cent with the biggest falls in alterations and additions.

“That shows that mums and dads have been frightened into a lockdown on future spending plans.”

Mr Fraser further said widespread flooding throughout Queensland earlier this year had placed a one-off dent in net exports – specifically from mining operations - in the March quarter.

This saw trend Gross State Product decline by 0.1 per cent in the March quarter, to deliver an economic growth rate of 3.7 per cent in annual terms, in line with financial year end predictions contained in the State Budget.

“Of course, Queensland families and businesses do not need to read through this data, they know first hand that tighter conditions have hit hard.

“The case was made out months ago and the evidence is now plain.

“The Reserve Bank needs to adopt an easing policy and it needs to be done at its meeting one week from today.”

Media Contact Chris Taylor 0419 710 874