The increase, to be announced at 9.30am Wednesday will lift Australia’s money market cash rate by a further 0.25 per cent to 6.75 per cent - an 11-year high.
It will push up the standard bank variable mortgage rate to 8.55 per cent, adding another $67 to the monthly cost of servicing a $400,000 loan. It is expected to be followed by another increase within months, lifting the standard bank variable mortgage rate to 8.80 per cent.
News on job advertisements, inflation, car sales and petrol prices yesterday all pointed to way to further hikes...
In October newspaper and internet job advertisements surged to their highest level on record and a non-official prices gauge complied by the Melbourne Institute for Applied Economic and Social Research pointed to an inflation rate that has already climbed beyond the Reserve Bank’s target zone.
The Melbourne Institute TD Securities gauge is compiled monthly using the same technique that the Bureau of Statistics uses to compile the official quarterly result.
It points to a headline rate of 1.0 per cent for the last three months, and 3.3 per cent over the year.
The headline rate is the measure both the Prime Minister and Treasurer have claimed to prefer in recent weeks, with Mr Howard saying it describes the prices actually paid by Australians.
The underlying rate, also calculated by the Institute, is 3.2 per cent - also beyond the Reserve Bank’s 2 to 3 per cent target zone.
Campaigning on the NSW central coast Mr Howard yesterday acknowledged the inevitably that the Bank would decide to push up interest rates today saying that there was “some inflation in the system, it’s coming in part from the drought, it’s coming in part from overseas commodity price pressures and also from the buoyancy of a strongly growing economy.”
“These things, if managed carefully can be accommodated within an overall growth path,” he added. “Now is not the time to replace an experienced Government on economic issues with an inexperienced Government.”
But when asked who would be the Treasurer in a reelected Coalition government after he departed mid-term taking his experience with him he failed to nominate one.
The Labor leader Kevin Rudd said that by acknowledging the inevitability of this week’s rate hike the Prime Minister was “putting up the white flag” after during the last campaign “looking down the barrel of the camera telling Australians that interest rates would be kept at record lows”.
He said Mr Howard had failed to acknowledge that there had been any miscalculation or failure on his part.
The Prime Minister meanwhile turned his attention to the banks, stressing that he did not want them to lift their mortgage rates by more than rise to be delivered by the Reserve Bank.
“These are things that have to be directly related to the cost of funds and no bank has a right, in our view, to take advantage of a general change in climate,” he said.
Other data released yesterday pointed to a widespread increase in the price of petrol to above $1.30 per litre and record car sales exceeding one million in the last year.
