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Tuesday, July 26, 2011

Raising interest rates will further burden families

Raising interest rates to control rising inflation, which is fast crippling working families, will only add further pressure on them, said PKR chief of strategy Rafizi Ramli.

NONEAccording to Rafizi (left), a 25 basis point increase in interest rates will place an extra cost of at least RM50 for a family servicing a home loan of RM280,000, which is the standard cost of a medium cost house in urban and semi-urban areas.

"Add this to the almost doubling of electricity costs for those whose bills are above RM77 a month (due to the recent tariff hike), rise in petrol prices, cost of food, cost of education etc which have all risen to be a real burden for the young, especially when wages have not risen at the same pace," he said in a statement today.

He, however, said that Bank Negara's move to raise the interest rate is the "conventional method" in addressing inflation issues, and as such, the onus is on the government to take "drastic measures to alleviate the impact of rising costs on the people".

NONEYesterday, Bank Negara governer Zeti Akhtar Aziz (left) reportedly expressed concern over Malaysia's inflation, saying that the rise should be "reined in".

27 month high

Malaysia's annual inflation rate hit a 27 month high in June at 3.5 percent. Bank Negara had earlier forecast average rates of 2.5 to 3.5 percent for the year.

Among the measures the government can take, said Rafizi, is to review to budget cuts on schools which is forcing schools to raise fees.

"The cost of schooling has risen dramatically as parents have to now contribute to the cost of activities," he said.

He also urged the government to look seriously into controlling housing prices which have been edging away from the reach of young families including double income earners and graduates.

He added that the First Home Scheme, which allows 100 percent loans only adds to the debt burden without solving the problem.

"The youth are the kingmakers in the next general election, so the logical thing for BN to do is to pay attention to what is hurting young voters," he said.

25 to 30 percent of voters are expected to be under the age of 35 by the next general election, which pundits said could happen within this year. - Malaysiakini

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