2nd November 2009
MEDIA RELEASE
INVESTMENT CLOCK INDICATES TOO EARLY IN THE
RECOVERY PHASE FOR THE RBA TO RAISE RATES NOW
Investment Commentator and author of the recently released book ‘Understanding the
Investment Clock – Your Road to Recovery’, supports the comments made by ANZ CEO, Mike
Smith, that it is still too early to raise rates further with a fragile Australian economy only just
beginning to recover from the Global Financial Crisis (GFC) and its contagion effects.
In commenting, Mr Rod North, Managing Director of Bourse Communications Pty Ltd said,
“Despite a range of indicators, only just beginning to show a trend for growth into 2010, many
companies and individuals will not be able to fully recover unless the RBA shows some restraint
with the timing of its further monetary policy adjustments. Most people have experienced one of
the worst years in business on record and the last thing needed is rates rising before Christmas”.
“As a backdrop to the fragile nature of the recovery, Credit Agency, Veda Advantage recently
released statistics showing that 16 per cent of Australians are struggling to repay debts, 1 in 5 are
likely to apply for credit in the next 6 months and despite a low interest regime, 23 per cent of
people surveyed owe more today than a year ago”.
“Whilst it is inevitable that the current emergency setting on rates needs to be readjusted, the
timing of the RBA to effect this adjustment is critical. The RBA certainly didn’t win any favours
putting rates up to excessive levels in late 2007/early 2008. In the context of today, the RBA
could have waited until the February 2010 meeting to commence this process and been able to
draw on more available and indicative economic data. Instead, they are opting to take on the
Scrooge persona before that big day in December”.
“The sober fact remains, as a direct result of the GFC’s effect on Australia, over 200,000 people
who were part of the full time work force over 12 months ago are now working part time on lower
hours. This means that despite now earning less, they still have to pay their mortgage and the
household bills with less in the ‘kitty’. If interest rates continue to rise too early in the ‘recovery
cycle’ this could stop the recovery dead in its tracks”.
For further information:
Rod North
Mobile: 0408 670 706
Email: rod@boursecommunications.com.au
NEWS 
