The reasons given by The Reserve for raising the interest rate...

The reasons given by The Reserve for raising the interest rate fail to tell us that interest rates are a terribly blunt intrument and even 100 points would do little to reduce spending.

Many home borrowers are still able to repay their mortgages at the old 8+% of several years ago and are doing so.

This rate rise is to give the impression to the leading economists (who know even less about how the economy works than the RBA),and have been clamoring for a rate rise, that the RBA knows what it is doing.

Why on earth do economists indulge in this sort of hurtful behaviour you ask?

Most likely because they couldn't get high enough entrance grades to Uni. to do a respectable course and want to pay us all back.

The truth about these agitators is that their lack of understanding of the economy is only surpassed by their short memories and inability to reflect upon the lessons of recent history.

Who can forget the interest rate rise to 18%, (23% for farmers) galloping in tandem with inflation? Answer: Our top economists. (They still think inflation is controlled by raising interest rates.)

Don't like to poo on their party but I wonder if they have noticed inflation increasing in the US as rates have plummetted to 1.75%. But then economists don't think like .. Just don't think is good enough.

Those investors who have bought investment properties in the last few years are sitting on up to 30% appreciation. So an interest rate hike will not deter them. Their repayments can be supplemented by higher rents.

Of course the unions will get a little more, out of employers for the workers, to cover their higher mortgage payments.

The Australian dollar will become more attractive to investors and our exports will become more expensive and tend to decline.

Imports will be sucked in and spending will increase if the lower prices are passed on to the consumers.

The result will be an increase in spending and a small decrease in inflation with potentially more Aussie jobs
lost to foreign countries.

The big driver of the housing boom has been the Government grants along with a sense that the economy is in good shape.

The grants are being phased out at the present high levels and will cause the housing bubble to deflate.

The real hurt will be felt by business which needs higher interest rates and hence higher wage demands like a hole in the head.

The real culprit is credit card spending, over which the Government has no control.

One glimmer of hope is that if the economy starts to fall in a hole this Governor, having learnt from his last clumsy effort to slow the economy, will reverse today's
decision quickly.