RBA hikes cash rate to 4.5%
By
Barney McCarthy
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4/05/2010 2:00:00 PM
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The RBA has raised the official cash rate by 25 basis points to 4.5%, sparking fears that home ownership is being pushed beyond the reach of many Australians.
The central bank’s decision is the sixth hike since last October and marks the highest cash rate since December 2008.
Forecasts for world GDP growth have been revised upwards of late, with improvement expected at trend pace or above.
RBA governor Glenn Stevens said the board was adjusting the cash rate towards levels consistent with average interest rates over the past decade.
“As a result of today’s decision, rates for most borrowers will be around average levels," he said. "This represents a significant adjustment from the very expansionary settings reached a year ago. The board will continue to assess prospects for demand and inflation, and set monetary policy as needed to achieve an average inflation rate of 2–3% over time."
However, Aussie chief executive John Symonds described the increase as a “slap in the face” to Australians already struggling with soaring petrol, food and housing costs.
He added: “Because of the shortage of housing, particularly in our capital cities, the cost of property is rising at an alarming rate. This, coupled with rising interest rates will make it difficult for future generations to enjoy home ownership. The Great Australian Dream will become a nightmare for many, who will become lifelong renters.”
“For those in their own homes, the stress of paying off their mortgages at higher rates will begin to bite. Cracks will start to appear.”
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