‘Unhelpful’ governments driving up interest rates: BCA

The Business Council of Australia (BCA) has accused governments of driving up interest rates by failing to rein in spending and borrowing.

The peak business lobby group said governments needed to show “fiscal discipline” to avoid further increases in interest rates, which would hurt businesses and consumers. The BCA said governments needed to cut spending and borrow less money to get the budget under control.

“Governments have a responsibility to manage their finances in a responsible way,” the BCA said in a statement.

“The level of government spending and borrowing is unsustainable and is putting upward pressure on interest rates.”

The BCA’s comments come as the Reserve Bank of Australia (RBA) is widely expected to raise interest rates again at its next meeting on August 2. This will be the third interest rate rise in as many months.

The RBA has said it is raising interest rates to contain inflation, which is running at its highest level in two decades.

The BCA said governments were making the RBA’s job harder by not doing enough to control spending and borrowing.

“Governments are effectively forcing the RBA to do all the heavy lifting on inflation,” the BCA said.

“This is not fair to the RBA or to the Australian people.”

The BCA said governments needed to take action now to get the budget under control.

“The longer governments delay, the more pain will be inflicted on businesses and consumers,” the BCA said.