Australia raises interest rates
Monday saw the Reserve Bank of Australia raise the interest rate in an effort to ensure economic recovery.
The increase of 25 basis points will bring he formal cash rate to 3.25% and is the first rate rise seen in Australia for 18 months. In the face of the RBA's announcement the country's main four commercial banks are to evaluate their interest rates.
Glen Stevens, governor of RBA, believes interest rates need to rise to ensure the initial growth seen in Australia's economy continues to thrive. The opinion of the RBA board is that the worst of the recession has passed and the time has come to slowly diminish the incentives granted by financial policy. It also hinted in the coming months the rate was likely to continue to climb.
The rate increase has shocked some in the industry believing it to be too soon to implement and that the 3% rate should have been held until 2010. The increase may well add up to $200 to the monthly repayment on a typical mortage. It is felt tht renewed consumer confidence wil be damaged by what is considered as premature inflation of interest rates.