One of the key rationale for the recent interest rate increase given by the Reserve Bank of Australia was that the economy has performed incredibly well compared to all the major developed nations around the world. Unemployment remained steady at 5.9% although this figure is expected to increase over 2010.
Given the cash rate of 3.00% was at historical 49-year low prior to the rate rise, the RBA felt this level of interest rate is no longer required in view of the recent economic performance. It is expected the cash rate will gradually increase over the next 6 – 12 months.
