RBA Rates Decision – May 2010

Today the RBA announced it would increase interest rates a further 25 basis points to move the cash rate to 4.5%. This is the 6th rate rise in the last 7 meetings of the RBA and the cash rate has now risen back to similar levels as December 2008. The focus will again be on the Banks to see if they follow the RBA’s lead or move rates of their own volition.

The unemployment levels remain relatively low in comparison to other nations in the developed world and our economy is still strong with China hungry for our resources. Commentary continues to predict a possible housing bubble burst but it remains to be seen if this will come to fruition.

As the interest rates continue their upward movement many people’s attention is now shifting to the question of fixing their interest rate. With the difference between the cash rate and the average 3yr fixed rate remaining at over 3%, the focus of this month’s newsletter is on the decision of fixing rates.

 

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