Industry groups are calling for caution after last week's rise in interest rates, suggesting that every rate increase also raises the magnitude of risk for Australian industry and households.
Chief Executive of AIG (Australian Industry Group), Heather Ridout, said this week that the rate rise will hurt and inevitably delay any early recovery in the housing sector, particularly in NSW.
"The impact will be more heavily felt in NSW, Victoria and South Australia where growth is below other states," Mrs Ridout said.
Executive Director of Master Builders Australia, Wilhelm Harnisch, said it needed to be recognised that the 0.25 per cent increase in rates would mean $80 a month had been added to the average Australian mortgage repayment in the space of less than three months.
Mrs Ridout pointed out that, when this recent rise is combined with earlier rate rises and higher fuel costs, households have been hit with the equivalent of a 0.75 per cent lift in mortgage rates this year.
"The national average price of unleaded petrol rose to 137.3 cents at the end of July, which amounts to a 22 cent increase since the start of the year of around 20 per cent. The average household is now paying around $192 a month on petrol, an increase of $31 a month since the start of the year. This is equivalent to a 0.25 per cent increase in mortgage rates (based on an average loan of $200,000 over 25 years," she said.
Mrs Ridout calculated that the increase in mortgage rates in May 2006 combined with additional petrol costs would have added in effect an additional $62 per month to the household bill, equivalent to an increase of 0.5 per cent in mortgage rates.
"Today's announcement means the $62 will be approaching $100, which will equate to households paying 0.75 per cent more in mortgage rates this year."
HIA's Executive Director of Housing and Economics, Simon Tennent said that lags between rate rises and official statistics pose a significant risk for both the economy and housing sector, and that figures are only just starting to now show the impact of the earlier rises.
"It is therefore vital that the Reserve Bank allows these two interest rate increases to be properly absorbed into the economy before considering any further changes to monetary policy," Mr Tennent said.
