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Date Published : Tuesday, March 04, 2008
Interest rates in Australia are now at their highest level for more than 12 years after the Reserve Bank of Australia (RBA) voted to raise rates for the second month in a row.
The fourth rate hike in six months has seen interest levels increase by 0.25 per cent to 7.25 per cent, affecting savers and homeowners across the nation.
Despite the current economic uncertainty worldwide, the RBA decided to increase rates as levels of inflation are currently at their highest for more than 15 years. The aim of the interest rate increase is to stem the growth of inflation.
Consumers with both savings accounts and home loans will be affected by the RBA's decision, which was widely expected by industry analysts.
Glenn Stevens, RBA governor, said: "This adjustment was made in order to contain and reduce inflation over the medium term.
"Inflation is likely to remain relatively high in the short term, and will probably rise further in year ended terms, before moderating next year in response to slower growth in demand."
Mr Stevens added: "Sentiment in global financial markets remains fragile. Australian financial intermediaries are experiencing increases in funding costs, which are being passed on to customers. Some tightening in credit standards for more risky borrowers is occurring."
The RBA sets interest rates to keep inflation between two to three per cent, but underlying inflation is now approaching four per cent, despite the RBA's repeated attempts to place a lid on rising consumer prices.
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