Reserve Bank announce Interest Rate rise

Tuesday October 6, 2009

The Reserve Bank of Australia has announced today that it has raised its key interest rate from 3 per cent to 3.25 per cent after reviewing the health of Australia's overall economy and the various indicators that dictate what level the rate should remain.

Governor of the RBA Glenn Stevens stated that ';Economic conditions in Australia have been stronger than expected and measures of confidence have recovered,''

''[The] basis for such a low interest rate setting has now passed,'' he said.

The move to increase the interest rate has made Australia the very first developed nation to begin to raise their central banks rate leading to confidence in the overall national economic position.

''The global economy is resuming growth,'' Mr Stevens said. ''With economic policy settings likely to remain expansionary for some time, the recovery will likely continue during 2010 and forecasts are being revised higher.''

The big four banks are now said to be reviewing their variable interest rates with the Reserve Bank's 25-basis-point rise projected to add around $50 per month to a standard mortgage taken out from the commercial banks.

Treasurer Wayne Swan stated that it was not a surprise that the Reserve Bank increased its rate and that it was another sign that Australia's economy was on the mend after benefitting from the lowest interest rates in 50 years.

''Of course it is the case that Australia is outperforming other advanced economies, and I guess many economists will see the decision today as a consequence of economic recovery,'' Mr Swan said.

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