Rates on the rise while credit crashes

The Reserve Bank has indicated a rate rise of 3.6 percent, above their ‘safety net’ of three percent. This makes an official rate rise in February almost inevitable.

But economic experts cannot agree whether the changing fortunes of the stockmarket will quell some of the increase, as the US Federal Reserve cut their domestic rates by 0.75 percent. The emergency cut revived the Australian market after its $110 billion loss on Tuesday.
 
Treasurer Wayne Swan warned that it would take about 18 months to tame the economy and implied spending cuts to the 2007/08 budget. Swan also told the unions to accept the need to keep wages in check. "What I would say to everybody—quite urgently to employers, employees and to unions—is that we will need to see some restraint to get us through this inflationary problem.”