Australia raises rates again

by Richard Kilner

Story link: Australia raises rates again

The Reserve Bank of Australia has again increased the interest rate by 25 basis points, so that it now stands at 3.5%.

This is the second month in a row that the interest rate has increased by 25 basis points, and in a press release the Reserve Bank has opined that the economic recovery is likely to continue into 2010, and has revised its forecasts in a positive direction.

However, the Bank did warn that the lingering after-effects of the financial crisis meant that many major economies would see more stilted recoveries.

Australian confidence has improved as the economic recovery there has been greater than expected, and peak unemployment is thought to arrive at a much lower level than earlier forecast.

The Reserve Bank has also stated that the window for a serious economic contraction has passed by, and that the monetary stimulus is to be withdrawn on a gradual basis.