By James Wells

SYDNEY: Fisher & Paykel chief operating officer, Mike Church, has forecast an interest rate rise which is expected to impact consumer confidence and potentially lead to price rises.

"I think there will be an interest rate rise. It is on the cards because I think the Reserve Bank is concerned about inflation," Church said.

"[The interest rate rise] will affect Fisher & Paykel because it will affect consumer confidence levels. The euphoria of tax cuts has been washed away by oil prices and the pending interest rate rise. The Middle East conflict is also linked to oil and may deliver a potential price rise for oil – it is all reasonably uncertain at the moment.

According to Church, the housing market overall is still extremely flat. The renovations cycle, particularly in New South Wales, has been in decline for two years and the housing market is well back down off the highs in the similar period.

“You are getting imbalances between states which are all based on supply and demand. In Western Australia – the housing boom is extraordinary and we are up between 12-14 per cent. In New South Wales, it is flat at best. There are 1,500 people moving to Queensland each week driving demand, while South Australia and Victoria are flat.”

Church believes the second half of the New Zealand financial year, which runs from 1 October to March 31, will be stronger than the first six month period.

“We see it as being a better second half. There are signs that infrastructure spend will help the locals in New South Wales in the lead up to the state election in early 2007 and then the market could be quite strong in 2008. Minerals will continue to help Western Australia and Queensland in that order. Victoria and South Australia are both finding it flat, but I can’t see them worsening in 2007,” Church said.

“Also in the second half, new products that we will be launching from August and September onwards including the AquaSmart energy efficient washing machine, Project Luna cooktop and our Ice and Water refrigerator will add real strength to our offer. It touches on each of our core categories at the higher end with value added products. We are very hopeful that our new products will add some buzz to the whole whitegoods category,” he said.

A spokesperson representing Electrolux Home Products managing director, Trevor Carroll, declined to speculate on the likelihood of interest rates increasing.

“EHP doesn’t wish to comment or speculate on interest rates. There is conflicting economic news about home lending and property values,” the spokesperson said.