The Interest Rate Rise We Have to Have

You know I couldn't let this one fly without comment.
Without giving too much of a history lesson, interest rates are a combined factor of economic growth, employment, the external sector, inflation - to name the majors only. Currently growth continues to expand across a broad range of industries with capacity at or nearing maximum utilisation. Employment continues to track near all time records with unemployment at unprecedented lows and causing wage demands and skills shortage - as I note one of your recent articles alludes to. The external economy showed today we are operating an expanding trade deficit as we import more than we are exported despite the resources boom. And then there's inflation. http://www.rba.gov.au/Statistics/measures_of_cpi.html
Look at the consistent rise in the Weighted and Trimmed mean in the right hand columns. The trend isn't encouraging.
Now there's ways to reel in an economy - fiscal or monetary tightening. A fiscal tightening hurts people and sectors that are being monetarily responsible, are not geared, leveraged or generally running ridiculous levels of debt to fund a lifestyle they "need" to have.
For mine, monetary policy isn't nearly tight enough globally to ensure that when China and India finish having this new era industrial and social revolution that the globe doesn't slip into decades long recession, depression or worse - world wars.
I like my creature comforts but there's some things I'd forego in order the ensure that our kids' generation isn't forced into paying for the mistakes of the last couple of decades of "responsible" economic management.
Let's face it - who wants to hear the words again about the recession we have to have?

Kenno, I wasn't really commenting on whether an interest rise is or is not justified in the current economic climate. It was more about taking a swipe at the government's propaganda that only they can keep rates low. I found it ironic that Howard is using much the same line as PJK all those years ago.

I hope our kids won't pay, either. Short term economic considerations aside, I fear they'll pay in spades when the economic effects of climate change really start to kick in. They're not going to be impressed when they look back and note we did bugger all about the problem.

Why is it I have visions of Mark Latham standing on the podium during the run into the last election with a massive cheque under his wing and the words "We guarantee no interest rate rise under Labor"....... It's not just one side of politics making calls on something they have no control over - it still remains the RBA's independant decision as to the management of monetary policy. I think what Howard was doing was making it clear that if rates had to rise, he'd prefer it come now and not affect the lead into the election period. What he'd be concerned about is next week when Stevens maintains a tightening policy bias and the markets start thinking about February being on the cards for another move - and I rate it a 60/40 likelihood at this stage.