RBA hints end to home loan rate rise run

The RBA has indicated that the recent string of home loan rate rises may be coming to an end.

Speaking at a business forum in Toowoomba last week, RBA governor Glenn Stevens said with the economy growing close to trend, and inflation close to target, interest rates are now falling back to normal levels.

“The Reserve Bank has moved early to raise the cash rate to levels that deliver interest rates for borrowers and depositors more like those that have been the average experience over the past 10 to 12 years,” Mr Stevens said.

“Those interest rates are now pretty close to that average.”

18 months ago, the RBA board moved quickly to establish an “emergency low” level of interest rates in the face of a serious threat to economic activity.

According to Mr Stevens, the central bank’s “aggressive” reduction in interest rates needed to be complemented by timely movement to raise rates back to normal levels once the emergency had passed.

Moving forward, Mr Stevens said the board’s focus will be on doing its part to achieve an average inflation target of about two to three per cent.

“Our task… is now to manage a new economic upswing. This will be just as challenging, in its own way, as managing the downturn. But it’s a challenge plenty of other countries would like to have,” he said.
Source The Adviser



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