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2007
Interest rates and stimulus package linked: Treasurer
Friday September 11, 2009
Treasurer Wayne Swan has indicated that interest rates and the government stimulus package are intricately linked, with the belief that as soon as the fiscal stimulus measures are withdrawn by the government, rates will rise.
Talk of ending the stimulus package early has been at the forefront with Liberal party members urging the Federal Government to abolish the stimulus package early, to save from increasing debt levels. However, recent reports show that by scrapping the stimulus package ahead of schedule would result in the loss of several thousands of jobs and an early rise in interest rates.
As it stands now, there are elements of the stimulus package that will end in December 2009 such as the extended first homeowners' grant and small business investment allowance. The remaining aspects of the stimulus package will continue on into 2010.
When the treasurer was questioned about the relationship between the stimulus package and interest rates he told reporters in Canberra on Wednesday that the stimulus package was always only meant to be targeted and temporary.
"As the stimulus is withdrawn, there will be adjustments on interest rates," he stated, going on to say that it is expected that the Reserve Bank of Australia will respond to a stimulus package withdrawal by raising its own official rate, where it has been steady at 3 per cent since April, the lowest level in 49 years.
"As private sector demand recovers as we go through next year, the stimulus is withdrawn."
What affect this inevitable interest rate rise by the Reserve Bank of Australia will have on the credit card industry and subsequent credit cards interest rates will predictably be felt in 2010.
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