Aussie Miracle Results in Rate Hike

Posted on Tuesday, October 6, 2009

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We've discuss the Aussie Miracle a few times here. Looks like that trend is continuing. FT Alphaville reports:

Australia on Tuesday became the first G20 nation to raise interest rates since the peak of the financial crisis, as its central bank increased the official cash rate from 3 per cent to 3.25 per cent. (Israel, for the record, became the first non-G20 developed country to raise borrowing costs in the period when it hiked rates in August).

As the FT reports, when raising rates from a 49-year low "emergency" rate, Glenn Stevens, governor of the Reserve Bank of Australia, said economic conditions in Australia had been "stronger than expected", while measures of confidence had recovered.

Stephens, who cut Australia's key rate by a record 4.25 percentage points between September 2008 and April, added that the economy is likely to expand "close to trend over the year ahead," and predicted that inflation will remain near the bank's target range of 2-3 per cent.