Australian banks expected to raise rates

by Richard Kilner

Story link: Australian banks expected to raise rates

Commercial banks in Australia have been given the green light by the Reserve Bank of Australia to increase lending rates independent of the RBA’s own decisions.

The RBA has raised the cash rate to 7.25%, a rise of 25 basis points.

At the present time, the central bank is seeking to lessen inflationary pressures and hold back the Australian economy from the dangers of overheating.

The central bank has stated it believes commercial banks will increase their own rates in an effort to cover rising costs.

Australia is facing a consumer slowdown and a weakening property sector, coupled with rising resource costs.

Opinion is divided amongst industry analysts as to whether rates would be decreased during the course of the year, or whether the central bank would keep a tight rein on the situation.