RBA ups rates to 3.5%
Author: Chris Zappone
Date: November 3, 2009
Publication:
Sydney Morning Herald
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Today's widely tipped 25-basis-point increase raises the central bank's cash rate to 3.5 per cent, marking the first back-to-back monthly increase by the RBA board since March last year when rates peaked at 7.25 per cent.
The quarter-point increase will add about $45 to the average monthly payment for a typical 25-year, $300,000 mortgage if it is passed on in full by commercial banks.
The Australian economy's unexpectedly strong performance during the global financial crisis was fueled in part by record-low interest rates that the RBA is now nudging higher to prevent inflation picking up. The central bank has singled out a run-up in housing prices - which jumped an average 4.2 per cent in eight capital cities in the September quarter alone - as one area of concern.
Yesterday, the Federal Government upgraded growth expectations for the Australian economy, forecasting growth of 1.5 per cent in the 2009-10 year, up from a forecast of a 0.5 per cent contraction made in the May budget.
The Government also slashed its projections for the unemployment rate, which is now expected to be 6.75 per cent by next June, down from the 8.25 per cent forecast in the budget. The jobless rate is currently at 5.7 per cent.
