Reserve Bank 'is biding its time'

Tuesday 16 February 2010

Article by Mozo

The Reserve Bank of Australia (RBA) decided to fix interest rates this month so that it could judge the impact of earlier rate rises on the economy, it has been revealed.

Minutes from the RBA’s February meeting show that the decision on interest rates remains "finely balanced" and that its members are expecting further increases this year, the Australian Associated Press reported.

"In considering the level of interest rates, members noted that the three increases in the cash rate late in 2009, together with the widening in the margins between the cash rate and many lending rates, had meant a material adjustment to the stance of monetary policy," the minutes say.

Further interest rate hikes could affect bank customers who decide to compare home loans this year.

This week, the Daily Telegraph reported that mortgage sizes are significantly outgrowing wage increases.

Mortgage Choice figures show that the trend is particularly significant in western Sydney and Newcastle, the newspaper said.

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