(6 October 2009 – Australia) The Reserve Bank of Australia (RBA) has decided to raise the cash rate to 3.25 percent, up 25 basis points as economic conditions improve.The cash rate increased today for the first time since March 2008, when rates had reached 7.25 percent. The reason for dropping rates by 4.25 basis points was the weakening of the economic conditions, which the RBA now considers to be stabilising.
The board highlighted a range of global factors that influenced their decision, including a resumption of global growth and an increase in global financial market sentiment.
In Australia the economy has been stronger than predicted and unemployment has not risen as far as expected, the RBA said.
It was also viewed that housing credit growth had been solid and dwelling prices have risen appreciably over the past six months.
The RBA noted that some interest rates are already high, including fixed rates, which have recently gone up, and business loans which incur a considerable risk margin. Despite this, the RBA still made the choice to raise the cash rate.