Fed: Rate rise will hurt business outside cities: chamber

AAP General News (Australia)
02-02-2000
Fed: Rate rise will hurt business outside cities: chamber

SYDNEY, Feb 2 AAP - The Reserve Bank of Australia's (RBA) decision to lift official
interest rates by half a percentage point today would damage businesses outside major
capital cities, the NSW Chamber of Commerce said.

"There is no justifiable reason for the Reserve Bank to have made a significant increase
- the economy is not overheating," chamber general manager, Margy Osmond, said in a statement.

Ms Osmond said the RBA had failed to look beyond its own domain as the strong economic
growth had largely occurred in major capital cities.

"Businesses based outside Sydney are not enjoying the full benefits of the strong economic
growth and the interest rate rise will slow consumer spending, therefore making the situation
worse," she said.

"In fact, it is rather ironic that on the one hand we have the prime minister making
a concerted effort to help the bush, while on the other hand we have a decision which
will be detrimental to businesses outside the major cities."

Many analysts had expected a quarter of a percentage point rate rise (or 25 basis points)
after weaker than expected inflation data was released late last week.

AAP rcg/tsm/lw/

KEYWORD: ECONOMY RATES CHAMBER

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