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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: biometricgngboy who wrote (14019)	9/28/2003 11:12:15 AM
From: biometricgngboy	Read Replies (1) \| Respond to of 306849

Costello deflects rate rise talk September 28, 2003 An interest rate rise was not the only factor that could end the property price boom, Treasurer Peter Costello said on Sunday. Economists have predicted interest rate rises as early as this year, and in recent weeks, Treasury secretary Ken Henry and the International Monetary Fund (IMF) have warned of the dangers of the house price bubble. Mr Costello, who has just returned from a trip to the Middle East, said interest rates were at historic lows, but that a rate rise was not the only way to stop the rise of house prices. He told the Seven network the construction boom would correct when supply exceeded demand, and that a recovery in shares could also attract investors back into the stock market. "Stocks have been at historical lows, so people have come out of stock markets ... The fact that those markets are recovering may bring some people back into stockmarkets," he said. Mr Costello said low interest rates had provided the economic stimulus that stopped Australia from following the United States into recession. "That's the reason you have low interest rates, by the way, so people can borrow, and that keeps the economy ticking. We needed that," he said. "It kept the Australian economy going at a time when we normally would have gone into recession." But he repeated warnings that people should not rely on six per cent mortgage interest rates continuing. "I say to people when they are making investment decisions: factor that into your thinking." Mr Costello defended the government's right to comment on interest rates, after Finance Minister Nick Minchin said the Reserve Bank would be crazy to clobber house prices with higher rates. He said the government's agreement with the Reserve Bank allowed ministers to comment on interest rates, and that this did not affect the bank's independence. "This is a free country. People are still entitled to express their views, but those views don't influence the decision-making of the bank. The Reserve Bank makes its own decisions," he said. "It will be taking into account a number of factors at the moment: the state of the general economy, that state of the world economy, inflationary pressures." "It may well be that things are turning. I certainly hope so," smh.com.au