Australia raises rates by 25 basis points
by Richard Kilner
Story link: Australia raises rates by 25 basis points
The Reserve Bank of Australia has elected to raise the country’s interest rate by 25 basis points to 3.25%.
The Bank has stated that the world’s economy is beginning to resume growth which will continue during 2010 as forecasters improve their predictions for the future.
However, there will be a more gradual recovery for many major economies as the economic hangover from the financial crisis continues for some time.
Australia’s immediate neighbours are in better shape for a recovery, with very strong Chinese growth likely to give the entire region a lift.
Confidence in Australia has improved as recent economic performance exceeded expectations and unemployment has not increased as rapidly as forecast.
The decision to raise rates marks a change as central banks around the world cut rates sharply during the financial crisis, and a few are now beginning to increase them once again.
In August, the Bank of Israel added 25 basis points to its interest rate, but the European Central Bank and the Bank of England (both with rates at historic lows) have yet to make a similar move.