Reserve Bank Keeps Rates On Hold


Interest rates in Australia are currently at a 12-year high of 7.25 per cent. Today, the Reserve Bank of Australia (RBA) met to consider interest rates and has left them on hold for the imediate future. However, the door remains open for further rate rises depending on inflation figures due out later this month.

The decision by the RBA was widely expected by analysts who said the bank needed more time to see the effects of its three rates rises since November. Consumer price data for the March quarter, due out on April 23, will also influence whether rates rise again next month.

While the economy remains strong, with employment continuing to grow, RBA Governor Glenn Stevens said in a statment that the series of rate increases is providing “tentative evidence that growth in domestic demand is moderating. Business and consumer sentiment have softened in the early part of 2008, and credit demand has slowed somewhat.”

“In the short term, inflation is likely to remain relatively high, and both the CPI and underlying measures will probably rise further in year-ended terms in the March quarter,” Mr Stevens said in the statement. “However, inflation should decline over time, provided demand slows as expected.”

Read the rest of the article from The Age, Business Day, 1 April, 2008.

Some analyist are predicting at least one more rate rises this year before we might begin to see any releif in 2009. What do you think about the current economic climate in Australia? Do you think interest rates will continue to rise, or will we begin to see an easing of rates in the near future?


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