Good News For Members
The minutes from the Reserve Bank of Australia’s December Board meeting have been released stating their monetary policy has returned to a normal range.
RBA deputy governor Ric Battellino noted the current cash rate of 3.75 per cent was still 50 basis points below the previous cyclical low of 4.25 per cent recorded in 2001.
"On the surface this might suggest that the cash rate is still unusually low," he said during a speech on Wednesday to the Australasian Finance & Banking Conference in Sydney.
"However, with other interest rates in the economy having risen by at least 100 basis points relative to the cash rate over the past couple of years, they are now above their previous cyclical lows.
"Another way to think about this is that the current level of deposit rates, housing loan rates and business loan rates would have been consistent, before the crisis, with a cash rate of at least 4.75 per cent.
"Taking these considerations into account, it would be reasonable to conclude that the overall stance of monetary policy is now back in the normal range, though in the expansionary segment of that range," Mr Battellino said.
Although economic analysts are predicting the RBA will raise interest rates in 2010, this should be more evenly spaced throughout the year than the pattern seen recently and hopefully nothing will happen until March 2010. This is good news for our Members.