Reserve Bank of Australia lifts interest rates to 6.5%

The RBA, Reserve Bank of Australia lifted its official interest rate by 0.25 percentage points to 6.5 per cent, the highest level in 11 years. In a prepared statement, RBA governor Glenn Stevens said the domestic data has showed an increase in demand and activity across the economy.

The decision was widely expected as twenty six of 28 economists surveyed by Bloomberg tipped the rate rise and a Credit Suisse index yesterday rated the likelihood of an increase at 82 per cent.For some months, the Board has recognised that stronger economic conditions were likely to put upward pressure on inflation, notwithstanding some dampening influence from the higher exchange rate," said RBA governor Glenn Stevens in a prepared statement. "However, the high CPI outcome for the June quarter indicated a less favourable near-term outlook, with the implication that any further increases in inflation would take place from a higher starting point than previously envisaged. "Based on these considerations, the Board judged that a somewhat more restrictive monetary policy setting was required in order to keep inflation consistent with the target in the medium term," he said.

Reserve Bank of Australia lifts interest rates to 6.5%, The Australian, Bloomberg
8/7/2007 5:41:52 PM