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Staff Reporter
The Reserve Bank’s decision to keep the official cash rate on hold at 4.25 per cent yesterday has been slammed by one industry economist.
Speaking about the rate decision, Housing Industry Association chief economist Harley Dale said the fractured state of economic conditions in Australia means there is considerable pain being felt by small and medium sized businesses, as well as some large businesses, which tends to get lost in a general focus on aggregate economic outcomes.
“Against this backdrop a rate cut today would have been the appropriate action to take,” he said.
“As it stands, the widely held expectation coming into 2012 of some further interest relief has been replaced by an apparent hold on official rates, while businesses and households count the potential cost from the possibility of further out of tune rate hikes by the banks.
“That doesn’t seem to be a healthy recipe for domestic economic activity, within which the risk of new residential building revisiting GFC-equivalent lows has increased over 2012 to date.”
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