Interest Rates Rise
The Reserve Bank of Australia has finally raised the official interest rate by 25 basis points, to 5.75 per cent.
International developments are continuing to provide stimulus to growth in Australia. The world economy is growing at an above-average pace for the fourth successive year and, significantly, forecasts have recently been revised upwards.
Commodity prices have been increasing strongly for some time, and they have risen further in the year to date.
This suggests a strengthening in the outlook for Australia's export earnings, with consequent expansionary effects on incomes and spending.
In Australia, domestic spending has been growing at a solid pace recently and prevailing conditions suggest that this is likely to continue.
High profitability and rising share prices are indicative of a favourable business environment in which investment growth is likely to remain strong.
There are also signs that the dampening effects of household balance-sheet adjustment on consumer spending are starting to wane
.