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May Rate Rise not Warranted : CBA

Posted by Tamara McDowell on April 21, 2010

CBA released a new report today showing consumer spending in March was the strongest it has been in eight months.

The Commonwealth Bank Business Sales Indicator (BSI) rose 0.7% for the month. However, the bank warned that this was no excuse to raise official interest rates further, despite indications from the RBA that rates may go up again in May.

“While the latest figures appear solid, it’s important that the Reserve Bank doesn’t overreact,” CBA executive general manager of local business banking Symon Brewis-Weston said. “Interest rates have lifted sharply since late last year, and the effects are being felt, with housing loans down five months in a row.”

The BSI recorded an increase in sales in all states and territories. The ACT topped the list with 1.2% growth, followed by Western Australia on 1.1%. Sales growth in NSW and Tasmania was a more sluggish 0.6%.

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