Interest rates, up they go again!
March 2, 2010
The Reserve Bank of Australia ("RBA”) has decided to raise the official cash rate by 25 basis points, or 0.25%, to 4%.
In commenting on the decision, RBA Governor Glenn Stevens said the global economy was growing and GDP growth would match trend pace in 2010 and 2011.
This was especially in Australia’s region, with some Asian countries even seeking to unwind stimulus packages.
Mr Stevens acknowledged that credit conditions remained difficult with banks in some countries still unwilling to loan.
Turning his focus to Australia, Mr Stevens said economic conditions last year were stronger than expected, as evidenced by unemployment peaking considerably lower than expected.
Other economic indicators including housing approvals had also been growing strongly, while business confidence surveys also pointed to improved conditions.
Commenting on inflation, Mr Stevens said CPI inflation had risen somewhat recently as temporary factors that had been holding it to unusually low rates are now abating.
”Inflation is expected to be consistent with the target in 2010,” Mr Stevens said.
He went on to say that, despite banks generally passing on more than the official rate, interest rates to most borrowers nonetheless remained lower than average.
”The Board judges that with growth likely to be close to trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average,” Mr Stevens said.
In commenting on the decision, RBA Governor Glenn Stevens said the global economy was growing and GDP growth would match trend pace in 2010 and 2011.
This was especially in Australia’s region, with some Asian countries even seeking to unwind stimulus packages.
Mr Stevens acknowledged that credit conditions remained difficult with banks in some countries still unwilling to loan.
Turning his focus to Australia, Mr Stevens said economic conditions last year were stronger than expected, as evidenced by unemployment peaking considerably lower than expected.
Other economic indicators including housing approvals had also been growing strongly, while business confidence surveys also pointed to improved conditions.
Commenting on inflation, Mr Stevens said CPI inflation had risen somewhat recently as temporary factors that had been holding it to unusually low rates are now abating.
”Inflation is expected to be consistent with the target in 2010,” Mr Stevens said.
He went on to say that, despite banks generally passing on more than the official rate, interest rates to most borrowers nonetheless remained lower than average.
”The Board judges that with growth likely to be close to trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average,” Mr Stevens said.
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