The Biking Broker Newsletter - 3rd November 2009

Reserve Bank Lifts Rates by 0.25% to 3.5%

The RBA has today announced the cash rate will be lifted by 0.25% (effective 4 Nov).

A statement by Glenn Stevens, Governor of the Reserve Bank, cites the following reasons:

• the prospects for Australia’s Asian trading partners appear to be noticeably better
• sentiment in global financial markets is much better than earlier in the year
• housing credit growth has been solid and dwelling prices have risen appreciably this year
• the exchange rate is likely to constrain output in the tradeables sector and dampen price pressures

To Summarise, he said,”..the Board’s view is that it is prudent to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker. The adjustments at the October and November meetings will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead”.

A full transcript of Glenn Steven’s statements is available here>>