(3 March 2010 – Australia) The Reserve Bank of Australia has increased its key interest rate for the first time this year to 4 percent, increasing mortgage repayments around the country.The central bank raised the cash rate by 25 basis points to four percent after leaving rates steady at the policy powers last meeting in February.
The rise also comes on top of three consecutive months of interest rate rises at the end of 2009.
Glenn Stevens, RBA governor, said that the board judged 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, adding, that today’s decision is a further step in that process.
The widely expected rate rise will add about A$46 to the average monthly payment for a typical 25-year, A$300,000 mortgage if it is passed on in full by commercial banks.
The move will put pressure on the estimated 250,000 first-home owners who have entered the market in the past 18 months, lured by government grants and 50-year low interest rates.
The latest official rate rise is aimed at keeping the economy from excessive growth that might spark higher inflation.