RBA: Robust growth may require rate hike

Monday 20 September 2010

Article by Mozo

Australia's "robust economic upswing" may require the Reserve Bank (RBA) to hike interest rates, its governor Glenn Stevens has said.

Speaking at the Food Bowl Unlimited Forum Business Luncheon in Victoria, Mr Stevens noted that provided "downside possibilities do not materialise", the RBA's task will be to manage the expected economic expansion through its monetary policy.

"We think the global economy will record reasonable growth over the coming year, though not as strong as the past year – a strength that, incidentally, surprised most observers," he added.

Mr Stevens also predicted that the low rate of inflation witnessed over the past two years will not drop much further.

Earlier this month, the Reserve Bank kept the official cash rate on hold at 4.5 per cent for the fourth consecutive month after hiking it six times between October last year and May.

According to Mr Stevens, economic growth will partly continue because of high export prices and "the largest minerals and energy boom since the 19th century".

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