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Reserve Bank increases the interest rate again!
Posted by admin | Posted in Debt Reduction, Real Estate Investments | Posted on 06-02-2008
At its meeting on 5th February 2008, the RBA decided to increase the cash rate by 25 basis points to 7.0 per cent in a bid to curb inflationary pressures in the economy. The year-ended increase in CPI inflation was 3 per cent. The cash rate is now at its highest level since November 1996.
Having weighed both the international and domestic information available, the Board concluded that a tighter monetary policy setting was needed now.
Governor of the RBA, Mr Glenn Stevens, said the board took careful note of recent events abroad and developments in financial markets as the fall-out from defaults in the US sub-prime mortgage continued to impact, as well as the global economic outlook amid fears of a recession in the US.
“The world economy is slowing and it now appears likely that global growth will be below trend in 2008,” he said.
“In Australia, we have seen financial intermediaries pass on higher costs to their customers over the past couple of months. There has also been some tightening of lending standards to risky borrowers, a process which may yet have further to go.”
In future meetings, the Board will continue to evaluate whether the stance of policy will be sufficiently restrictive to return inflation to the 2-3 per cent target.
