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» Articles - RBA raises cash rate for the sixth time since October 2009
RBA raises cash rate for the sixth time since October 2009
The Reserve Bank of Australia (RBA) Tuesday as expected raised its cash rate target for the sixth time since October 2009, returning the setting of monetary policy to average levels for the first time since the global economy plunged into recession in 2008.
The hike takes the cash rate target to 4.50% from 4.25% and comes as the economy is enveloped by a fresh commodity price upswing, house price increases at a double-digit pace, and a tightening labor market.
Economists expect the RBA to continue raising rates in 2010, making it one of the most aggressive central banks among developed economies.
The RBA is likely to soon adopt a restrictive policy stance, setting it further apart from other central banks, many of which are managing fragile economic recoveries.
The commodity price upswing, underpinned by massive increases in coal and iron ore exports, is expected to tip around A$20 billion into the economy in 2010 at a time when economic growth has already recovered to a long-term trend rate of around 3.0%.
Financial markets expect a further 100 basis points of rate hikes over the next year as the RBA reacts to a further acceleration in economic growth and a potential deterioration in the inflation outlook.
The above statement by by James Glynn, Dow Jones Newswires, on the Monetary Policy Decision announced today (4 May 2010).
Vas Banschikov
www.SuperInvestor.com.au
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