Fed: Reserve Bank could deliver more bad news for homeowners

AAP General News (Australia)
08-04-2006
Fed: Reserve Bank could deliver more bad news for homeowners

CANBERRA, Aug 4 AAP - Homeowners will get a clearer picture today about whether they
will face another interest rate rise before Christmas when the Reserve Bank issues a snapshot
of the economy.

After Wednesday's decision to lift rates by 25 basis points, the bank will today release
its detailed quarterly statement on monetary policy.

The statement provides an overview of the Australian economy and offers a crystal ball
on inflation and the likelihood of another increase in interest rates.

Most analysts are predicting another rate hike before the end of the year, which would
push the standard variable home loan rate to above eight per cent.

Prime Minister John Howard yesterday played down talk Australia could be headed for
a recession after this week's rate rise - the second in three months.

Official interest rates now stand at six per cent, their highest level since 2001.

Mr Howard says it's misguided to be talking about a looming recession and insists the
economy is still strong.

Westpac customers will be the first to feel the impact of the latest interest rate
rise after the bank became the first major lender to pass on the extra 25 basis points.

Labor says the impact of interest rate rises is greater these days because household
debt has soared in the past decade.

Opposition treasury spokesman Wayne Swan says Australians are now paying a record proportion
of their weekly wage just to cover their mortgages.

AAP dcr/goc/grc/nf

KEYWORD: ECONOMY DAYLEAD

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