In a report released by BIS Shrapnel high interest rates could be here to stay with a tight labour market and rising fuel costs. BIS argues that while inflation will initially ease, inflation will stay above the Reserve Bank's target for the next ten years. Higher prices for fuel imports and food will keep inflation high. Higher interest rates will also mean that business investment will fall but construction will increase. However in the report it is argued that the mining boom is largely insulated from interest rate changes and as a result these changes have had little effect on Queensland and Western Australia, but in New South Wales and Victoria these changes are already beginning impact demand.
