TASMANIA’S peak employer body, the Tasmanian Chamber of Commerce and Industry (TCCI), has warned that the 25 basis point interest rate rise, taking the official rate to 4.50 per cent, highlights the two-speed nature of Australian economy.

TCCI chief economist Richard Dowling said that many Tasmanian businesses have not returned to profit growth, while sales revenue and investment remain weak.“The rate rise is premised on a surging national economic recovery. Unfortunately while Tasmanians are not experiencing the full benefits of this resurgence they must face the costs of higher rates.

“The latest TCCI business survey shows that profit growth is still negative and that employment growth is weak.

“Recent rate rises will further add to the cost of doing business and reduce disposable consumer spending,” Mr Dowling said.

Mr Dowling said that the retail trade and export sectors under the most pressure.

“Consumer spending has been flat since Christmas and obviously higher rates will weaken this further.

“The high dollar and weak international economy is continuing to put the squeeze of our exporters,” Mr Dowling said.

Mr Dowling said the Reserve Bank has indicated that rates are now close to the average experience over the past decade.

“We can expect that the Reserve Bank will now pause for some months to assess the full impact of recent rate increases,” Mr Dowling said.