6th Interest Rate Rise in a Row
The Reserve Bank has again slugged the nation's borrowers, raising its key interest rate today for the third month running as it moves to keep inflation in check.
The central bank lifted its cash rate by a quarter of a percentage point to 4.5 per cent, its highest level since the end of 2008. The move was tipped by a majority of economists after surges in consumer price inflation and house prices in the March quarter.
This month’s interest rate rise marks the sixth increase since October 2009. The string of rate hikes, broken only by the summer break in January and February 2010's pause is aimed at discouraging excessive borrowing as economic growth returns to more normal levels.
Before today's rates verdict, investors were pricing in at least four interest rate increases over the next 12 months, which would bring the RBA's cash rate - the starting point for banks when they calculate standard variable and other lending rates to 5.25 per cent.
Financial markets lost ground after the RBA move. The Australian dollar fell to .89 US cents in late afternoon trading, while stocks extended losses to close about 1 per cent down for the day.
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