Dr Shane Oliver, chief economist at AMP Capital, has urged the Reserve Bank to cut the cash interest rate by at least 0.25 percentage points to avoid Australia falling into recession.
Oliver said the RBA risked joining Europe in falling “behind the curve” by failing to act as European and US debt worries sent share markets plunging last week.
This comes at a time when the economic problems in Europe and the United States are likely to affect Australia and the Asian region.
In fact Treasurer Wayne Swan recently told Sky News: “There’s no doubt that recent events … impact on global growth, that flows through to domestic growth, that flows through to budget revenues, and that does have an impact.”
Opposition finance spokesman Andrew Robb also called for a cut.
And Future Fund chairman David Murray said fiscal settings were wrong.
“This is not a time when state and federal government should be becoming more highly indebted, and they are,” he told ABC TV.
In response to the calls Finance Minister Penny Wong accused the federal opposition of talking down the economy.
Senator Wong said Australia has already demonstrated it has the strength to survive turbulent times.
She told ABC Radio it’s true the global economic recovery is fragile but if the coalition cared about the Australian economy they wouldn’t be trying to talk down and undermine confidence.
SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
PREFER TO SUBSCRIBE VIA EMAIL?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.