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Rates tipped to rise as Rudd celebrates miles -

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Rates tipped to rise as Rudd celebrates milestone

AM - Monday, 3 March , 2008 08:00:00

Reporter: Samantha Hawley

PETER CAVE: Kevin Rudd officially celebrates his 100 days in office today. The Prime Minister,
somewhat precipitately, marked the milestone last week by releasing a booklet of what he thinks the
Government has achieved over the past three months.

But this week the Reserve Bank is widely tipped to lift housing interest rates again with one
economist warning that the banks might go even further.

It that happens, the Treasurer warns that economic growth could slow significantly.

From Canberra, Samantha Hawley reports.

SINGER (singing): Australians all let us rejoice for we are young and free...

SAMANTHA HAWLEY: The Prime Minister spent the day before his 100th day in office at the
Government's second community cabinet meeting, this time in Kevin Rudd's home state of Queensland.

SINGER (singing): ...Our lands abound in....

SAMANTHA HAWLEY: Hundreds of locals turned out to quiz the Prime Minister and his senior Cabinet
colleagues on a range of grassroot issues.

KEVIN RUDD: How we going? Can you hear me down the back?

SAMANTHA HAWLEY: And after initial microphone difficulties and hours of discussion, those who'd
turned out were pleased with what they heard.

VOX POP 1: I think it is very brave of the Prime Minister and the Cabinet to front up in front of
the people.

VOX POP 2: I think it was an excellent way for people to voice their opinions.

VOX POP 3: To me, very down to earth so people can actually respond on some of the issues they
might feel that might get blocked somewhere by the bureaucracy.

SAMANTHA HAWLEY: It's the kind of response that Kevin Rudd is getting used to. In fact, during his
first 100 days at the top his approval rating has sky rocketed to an unprecedented high of 70 per
cent.

But he acknowledges pain's on its way.

This week it'll come in the form of an expected rise in interest rates with economists predicting
they'll increase again by 0.25 of a per cent when the Reserve Bank meets tomorrow.

BILL EVANS: It will take it to 7.25 per cent and I think there's a possibility of going even
further in this cycle.

SAMANTHA HAWLEY: Westpac's Chief Economist is Bill Evans.

BILL EVANS: My feeling is that the inflation outlook is so disturbing for them that they will
eventually have to do it, a raise rate further.

SAMANTHA HAWLEY: The Government says it's doing all it can to reduce inflationary pressures and the
Treasurer Wayne Swan's now admitted that'll means a significant slowing of economic growth.

The President of the Australian Council of Trade Unions, Sharan Burrow is worried it will go far
deeper.

SHARAN BURROW: We are very concerned that it will flow dramatically and you won't only see now the
pressure of price rises of interest rate rises in particular, but other areas, food, child care,
the cost of petrol of course, mounting as families struggle just to stay afloat.

SAMANTHA HAWLEY: She's urging the Reserve Bank to hold off increasing rates again, saying the
previous rises haven't had time to slow spending.

But Bill Evans is confident rates will rise and says some banks may once again choose to go further
than the RBA's ruling.

BILL EVANS: The credit markets at the stage have not improved in the way that we would of liked
them to have done and so it will be a matter of the bank's monitoring the situation.

SAMANTHA HAWLEY: And it's certainly a possibility.

BILL EVANS: We've seen it happen once, once it's happened once, it's possible it could happen
again.

PETER CAVE: Westpac's Chief Economist, Bill Evans, ending that report from Samantha Hawley.