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Reserve Bank Of Australia – Rates now 6.75%

Posted by Adrian on November 6, 2007

As expected by majority of the market, the Reserve Bank of Australia has lifted interest rates from 6.50% to 6.75% an increase of 25bps.

This is all due to the inflationary conditions revealed by October’s CPI, (please refer to Australia entering into hyperinflation? CPI figures released October 2007, core inflation 16yr high for more details.)

With higher food, fuel and other consumer costs rising, the RBA may increase interest rates again early next year. The other issue is the credit markets, as banks suffer continued losses from the credit crisis caused by the the US mortgage market collapse. All banks will be increasing fees and interest rates independent from the reserve bank. This will inevitably pressure the consumer and the local markets. What we might see is the beginning of a sharp downturn of the Australian economy

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