Julia Gillard Puts Heat On RBA Over Rates

Julia Gillard has put the onus on the Reserve Bank to bring down interest rates to boost the economy, arguing that Labor has delivered on spending cuts and a budget surplus and there is now room for monetary policy to play a role, The Australian reported. The Prime Minister will tell a business audience in Perth Thursday that cutting interest rates to boost struggling sectors of the economy would be fully consistent with the Reserve Bank's obligations to "best contribute to economic prosperity and full employment". Ms Gillard will bluntly challenge people calling for interest rate cuts to back the government's determination to return the budget to surplus. "A surplus budget provides room for monetary policy," Ms Gillard will say, staring down calls from the Greens for the surplus to be delayed to protect public service jobs and fund increases to Newstart and a national dental health scheme. "In the current economic environment, should the RBA consider it appropriate to change the cash rate, this could deliver widespread benefits for households and business - noting that a number of sectors of the economy most under strain are arguably more sensitive to interest rates." Ms Gillard's comments that the RBA's charter already allows it to target economic prosperity and full employment come amid rising calls for the bank to cut interest rates and help lower the Australian dollar as the non-resource sectors of the economy struggle with the impact of a high exchange rate. The RBA board is expected to cut rates from the current 4.25 per cent level at its meeting next month - one week before the federal budget - provided inflation appears to be under control. Read more.