The Reserve Bank of Australia (RBA) announced a cash rate increase of 25 basis points to 3.25% effective 7th October 2009. This is the first rate increase since the global financial crisis in 2008, when interest rates gradually plummeted from 7.25% in March 2008 to 3.00% in April 2009.
The RBA believes: “…With growth likely to be close to trend over the year ahead, inflation close to target and the risk of serious economic contraction in Australia now having passed, the Board’s view is that it is now prudent to begin gradually lessening the stimulus provided by monetary policy. This will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead.”
The interest rate is still at a manageable level compared to where it was in early 2008 -- still a good time to pay off as much in your loan and mortgage to help decrease the principal. Good times are coming for the savers and the retirees who depend on their interest earnings.