With Australian interest rates at historic lows, consumers are quite conscious that it won’t last forever.
Thus, I thought it timely to talk about the four phases of interest rates that Australia has experienced in the last 30 to 40 years.
1) Interest rates being cut continuously
From August 2008, when interest rates were at their peak of 9.45% (the highest since July 1996 when they were 9.75%, albeit nowhere near the highs of the late 1980’s when they reached 17%), they fell to lows of 6.05% in December 2001.
2) Interest rates rising slowly
Whilst in May 2002 rates began to rise, it was extremely gently. Quite simply, since May 2002, interest rates rose to 9.45% in April 2008 – a mere 3.4% in almost 6 years
3) Massive cuts
In August 2008, interest rates in Australia were at their highest for 12 years, but then the slashing began and as of September 2009, they’re at historic lows of 5.55% (the lowest since August 1968).
4) The inevitable rise
Such lows cannot and will not continue. The Economist states that the Australian economy is in the best position in the Western world. Thus, it’s likely that by October or November we’ll see our first rise for the year.
According to a recent report by AMP Capital, it is likely that the official cash rate will hit 5 per cent before the end of 2010, according to a report from AMP Capital.
The continued run of better than expected economic data, including GDP growth of 0.6 per cent in the June quarter, means the chance of an interest rate hike by the end of the year is steadily rising.