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Date Published : Wednesday, February 20, 2008
The recent interest rate hike by the Reserve Bank of Australia (RBA) would have been even higher if it had got its own way, official documents have revealed.
Earlier this month, the RBA increased interest rates by 0.25 per cent to seven per cent - the highest they have been for 12 years.
However, documents from the central bank suggest that many influential members of the RBA wanted a higher increase - a 0.5 per cent raise - on rates in a bid to stabilise the economy and keep inflation under control.
The higher raise was not undertaken by RBA officials as they took sympathy on borrowers, who have been hit by three separate 0.25 per cent rate hikes since August.
According to the minutes of the RBA meeting: "The debate focused on whether the change in the cash rate should be 25 or 50 basis points.
"The discussion noted that a good case could be made for the larger move, on the grounds that the inflation outlook had deteriorated and the risk of inflation expectations becoming dislodged had increased.
"Thus there was a case for the board to send a stronger signal of its intention to act as necessary to reduce inflation."
The minutes conclude that more rate rises are likely in the near future, with March's meeting of the RBA committee likely to see more pain for those with variable rate home loans.
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