RBA lifts interest rates
(6 May 2010 – Australia) The Reserve Bank of Australia (RBA) has delivered the sixth interest rate rise in eight months as Australia’s economy remains one of the best performing in the world.
The central bank has increased the official cash rate by 25 basis points to 4.5 per cent with the Big Four Australian banks swiftly following the RBA’s action by increasing key mortgage lending rates by 25 basis points.
RBA governor Glenn Stevens stated that the rate hike "represents a significant adjustment from the very expansionary settings reached a year ago.'
'In both underlying and CPI terms, inflation over the most recent 12 months was around 3 per cent,' Mr Stevens said.
'Nonetheless, the extent of decline from here may not be quite as much as earlier forecast and inflation now appears likely to be in the upper half of the target zone over the coming year.'
Mr Stevens also indicated that the official cash rate might now be close to the 'average' level that the bank has been targeting over the past eight months.
'With the risk of serious economic contraction having passed some time ago, the board has been adjusting the cash rate towards levels that would be consistent with interest rates to borrowers being close to the average experience over the past decade or more,' he said.
'The board expects that as a result of today's decision, rates for most borrowers will be around average levels,' Mr Stevens said.
Earlier, the Australian Bureau of Statistics released figures showing that house prices rose 20 per cent during the year to March, the fastest pace recorded by the bureau since the series began in 2002.
RBA governor Glenn Stevens stated that the rate hike "represents a significant adjustment from the very expansionary settings reached a year ago.'
'In both underlying and CPI terms, inflation over the most recent 12 months was around 3 per cent,' Mr Stevens said.
'Nonetheless, the extent of decline from here may not be quite as much as earlier forecast and inflation now appears likely to be in the upper half of the target zone over the coming year.'
Mr Stevens also indicated that the official cash rate might now be close to the 'average' level that the bank has been targeting over the past eight months.
'With the risk of serious economic contraction having passed some time ago, the board has been adjusting the cash rate towards levels that would be consistent with interest rates to borrowers being close to the average experience over the past decade or more,' he said.
'The board expects that as a result of today's decision, rates for most borrowers will be around average levels,' Mr Stevens said.
Earlier, the Australian Bureau of Statistics released figures showing that house prices rose 20 per cent during the year to March, the fastest pace recorded by the bureau since the series began in 2002.
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