The Reserve Bank of Australia (RBA) has acted too hastily in raising the cash rate when the domestic and international economic outlook is still uncertain, a business lobby group says.
The RBA raised the cash rate on Tuesday by 25 basis points to 3.25 per cent, the first major economy to lift interest rates since the onset of the global recession.
"We believe the Reserve Bank of Australia has actually pulled the interest rate trigger too quickly," Australian Chamber of Commerce and Industry economist Greg Evans told reporters in Canberra.
He said the decision to lift the key cash rate will have an impact on both consumer and business confidence, as well as business investment and of course borrowing costs.
"We believe on the back of continuing weakness in trading conditions and also a very uncertain outlook both domestically and internationally ... we believe the Reserve Bank has acted too hastily," he said.
He said the central bank may have mistaken strength in the economy attributable to the fiscal stimulus to real underlying strength in the economy.
"That is why we argue the case that the Reserve Bank should wait and see the strength of the economy as fiscal stimulus measures do in fact phase out."
