Australia raises interest rates for third consecutive month

| December 1, 2009 | 0 Comments

Australia, which is one of the few developed economies not to have fallen into recession like its counterparts throughout the world, has increased interest rates from 3.5% to 3.75%.

It is the third month in a row that interest rates have increased and the move was not unexpected.

The Australian economy has benefited from an increase in commodity prices, while exports have received a boost due to demand from China for its iron ore and other raw materials.

In a statement, Reserve Bank of Australia governor Glenn Stevens, said: “In Australia, the downturn was relatively mild, and measures of confidence and business conditions suggest that the economy is in a gradual recovery.”

“The effects of the early stages of the fiscal stimulus on consumer demand are fading, but public infrastructure spending is starting to provide more impetus to demand,” added Mr Stevens.

Craig James at the Commonwealth Bank of Australia comments: “The level of interest rates is still historically very low.” He is predicting that rates could hit 4.25% in early 2010.

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