For interest rates to rise economies would have to be growing at least by 3.5% annually and on a sustained basis. If that is given then employment and wages would have risen in a sustainable way. We would not see interest rates rise to the levels as seen in the late 90s but more likely to the traditional levels of around 6%. At this level we would see some pain but only up marginally on what we have now. But I can not see this scenario playing out at least not within the next 3-5 years. Unemployment and a dramatically rising welfare bill is our biggest threat coupled with increased Government borrowings as a result, we actually will have to see a decrease in real wages in the tourism and agricultural sectors as they will be the bread and butter economies of Australia in the next few years, a low $ of around 65c to the $US is essential.
