Governor Glenn Stevens stated that the view of the RBA is that the global economy has continued to improve and domestic activity is recovering whilst the bank seeks to ensure that Australia’s economic expansion remains on track without an outbreak of inflation (which currently stands at 2.1%).
And whilst increased rates means more hurt for borrowers, this issue is made complicated by the ever-shortage of available homes in Australia, which is one of the causes of runaway house prices. As such, new construction is required to alleviate the demand-issues. Unfortunately, in February of this year, building approvals in fact declined, furthering the depth of the problem.
Analysts expect there to be a number of additional rises this year, with many expecting the rate to reach 5.25% by December.
MORE… read Governor Glenn Stevens’ statement click here