Fed: Costello says rate rise not result of GST

AAP General News (Australia)
08-03-2000
Fed: Costello says rate rise not result of GST

Federal Treasurer PETER COSTELLO says the latest interest rate rise isn't a result
of the inflationary effects of the GST.

The Reserve Bank of Australia yesterday increased the official cash rate by quarter
of a percentage point to 6.25 per cent.

Mr COSTELLO says in making the decision to raise interest rates, the RBA looked at
the Australian economy over the months before the introduction of the GST on July 1.

He's told Perth radio 6PR the economy has grown stronger than expected and the world
market is picking up.

He says the price effect of the GST was one-off, and the RBA wasn't taking it into
account in its decision-making process.

Meanwhile, Mr COSTELLO says figures on job losses in the building industry due to the
rate rise are speculation.

Building industry groups say the increase will lead to as many as 100,000 job losses
in the next 12 months.

Mr COSTELLO says there's been a build-up in housing approvals and housing business
-- partly from contracts brought before July 1 -- and there's an expectation it will edge
off.

On the issue of wages, Mr COSTELLO has reiterated that there's no grounds for people
to be seeking wage claims of more than four per cent.

AAP RTV eg/mfh/nf/rt

KEYWORD: RATES COSTELLO (CANBERRA)

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