Thankfully, The RBA Displayed
The Courage of Its Convictions

Clearly, many households and first home buyers will have reason to complain … but someone had to step up and show leadership. And it certainly wasn’t going to be the Labor Party.

The RBA's Reasons for Increasing Rates

The RBA's Reasons for Increasing Rates

By increasing the official cash rate from 3% to 3.25%, the RBA has signalled its intention to ensure Australia’s financial future remains the envy of the world.

Rather than simply basking in the recent praise from the IMF and other G20 members.

To its credit, the Federal government acted swiftly to shore up economic confidence, when it was needed this time last year. But you have to remember that Labor governments have always been big spenders when in power.

Therefore, the package they put together was almost second nature.

However, all the structural economic foundations had been laid during the 1980s and 1990s — and this is what left Australia well placed to lead the world out of the global financial crisis.

Currently, our underlying rate of inflation is too high at 3.75% — particularly when the RBA expects Australia’s economic growth to be at a strong 3% per annum next year.

As such you can expect the RBA to continue with regular 0.25% movements — until the cash rate reaches 5%, sometime during next year.

Then, you’ll discover exactly how good Labor’s economic credentials really are, in the run-up to the next election.

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