(22 February 2010 – Australia) The governor of the Reserve Bank of Australia, Glenn Stevens, has said that interest rates will rise to keep a lid on inflation.Speaking Friday, at the House of Representatives Standing Committee on Economics in Canberra, the governor told the country’s politicians that borrowing rates paid for business and household mortgages are still 50 to 100 basis points below the decade average.
Mr Stevens noted that rates were a ‘fair bit closer to normal’ than when he spoke last August, and added that the RBA had the luxury of pausing rates in February because they started hiking earlier.
If economic conditions evolve roughly as expected, further adjustments to monetary policy will probably be needed over time to ensure that inflation remains consistent with the target over the medium term, Mr Stevens said.
Mr Stevens said gross domestic product (GDP) was expected to expand in the coming years.
The RBA thinks, on the basis of available data, that the real GDP grew by about two percent through 2009 and expects it to grow by a bit over three percent for 2010 and about three percent in 2011 and 2012.