(28 April 2010 – Australia) The Reserve Bank of Australia’s governor Glenn Stevens has given hope to Australian home owners, indicating that rate rises may be coming to an earlier than expected end.Mr Stevens said at the end of last week that interest rates were now ‘pretty close’ to the 10-year average, giving the central bank a reason to slow up its monetary measures.
While Mr Stevens had relaxed his stance on rates, he also expressed a cautious view regarding some parts of the economy.
Many economists have reviewed their position on the chances of a rate increase, when the RBA meets in again May, saying that it the statement significantly lowers the chances of the RBA hiking cash rates in May and even June.
If the economy is growing close to trend, and inflation is close to target, one would expect interest rates to be pretty close to average, Mr Stevens said in a speech.
The Reserve Bank has moved early to raise the cash rate to levels that deliver interest rates for borrowers and depositors more like those that have been the average experience over the past 10 to 12 years. Those interest rates are now pretty close to that average, Mr Stevens added.