Interest rates rise, again

THE RESERVE Bank of Australia (RBA) has decided to lift interest rates by 25 basis points to 4.25 per cent, effective 7 April 2010.

RBA Governor Glenn Stevens reitereated last month's statement, saying "the global economy is growing, and world GDP is expected to rise at close to trend pace in 2010 and 2011." Although Mr Stevens noted that expansion is "still hesitant in the major countries, due to the continuing legacy of the financial crisis, resulting in ongoing excess capacity."

Mr Stevens said that Australia's terms of trade are rising, with output growth over the year ahead likely to exceed last year. He said unemployment appears to have peaked and that credit for housing has been expanding at a solid pace.

"Interest rates to most borrowers nonetheless have been somewhat lower than average. The Board judges that with growth likely to be around trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average. Today's decision is a further step in that process."

Visit the Reserve Bank of Australia website for more information <>.

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