Australia increases rates to 4.25%

by Richard Kilner

Story link: Australia increases rates to 4.25%

The Reserve Bank of Australia has chosen to increase the nation’s interest rate by 25 basis points, raising it to 4.25%.

Governor Glenn Stevens has stated that the global economy is continuing to expand, and will do so at almost trend rates this year and next.

Worldwide, financial markets are in far better shape than a year ago, although credit conditions remain challenging in some countries.

In Australia, unemployment peaked at a lower level than was widely anticipated, and inflation remains roughly on target.

The country has now escaped, it is believed, the risk of a serious economic decline and the central bank is therefore gradually reducing the monetary stimulus.

The Reserve Bank of Australia has increased rates by a total of 125 basis points in recent months, whereas both the European Central Bank and the Bank of England have retained the record low rates first implemented during the worldwide slashing of interest rates as part of concerted worldwide action to combat the financial crisis.