PERTH—The Federal Government is to blame for upward pressure on interest rates, not the Labor states, WA Premier Alan Carpenter says.
Ahead of an expected interest rate rise this week, Federal Finance Minister Nick Minchin today blamed the Labor states for putting upward pressure on rates by going into debt.
The Reserve Bank of Australia (RBA) is widely tipped to raise interest rates by one quarter of one per cent on Wednesday.
Senator Minchin said the Federal Government was minimising upward pressure on inflation and interest rates.
"All our levers that we control are set to low inflation, we've got spending under control, we've paid off debt, we've reformed the industrial relations system," he said.
However, Mr Carpenter said the Federal Government was trying to shift the blame in the lead up to the federal election.
"John Howard and Nick Minchin are asserting states are running deficits and that's affecting interest rates," Mr Carpenter said.
"It doesn't work that way.
"John Howard told people he'd keep interest rates down and he hasn't.
"So he's looking for people to blame - he's to blame."
Senator Minchin also indicated he does not believe the expected interest rate rise this week is warranted.
He said he did not want to give the RBA gratuitous advice but pointed out the consumer price index was 2.1 per cent for the year to June and underlying inflation is running at 2.6 per cent, well within the central bank's target range.
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