Interest rate increases have ‘gone too far’

The Reserve Bank has “definitely overdone” interest rate rises this year and should slash the rates in line with Australia, economic forecasting group Berl says.

Instead of being on “perpetual inflation alert”, rates should be lowered to encourage investment, productivity improvements or business expansion, Berl says.

“The psychotic fear of inflation is clouding the need to pursue more important goals,” Berl Forecasts editor Ganesh Nana said.

In its September forecasts issued today, Berl predicts modest economic growth of 2.6 per cent in the year to March 2008, and roughly the same for the following two years.

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