More pain from the RBA's grim reaper

Posted on 6/04/2010  

The Grim Reaper of the Reserve Bank Glenn Stevens has handed Australian families and businesses another unnecessary interest rate rise.

 

The official cash rate will rise from 4.0% to 4.25% - the second consecutive monthly rise and further evidence that Stevens and his cohorts don’t know where they want interest rates to be, other than rising.

 

Customers unfortunate enough to have mortgages with Westpac will soon find themselves paying around 7.3% on their loans. Those with the average loan of $283,000 over 25 years will be paying about $2,050 per month, up from about $2,000 previously.

 

Those a little more fortunate who have a loan with the CUA credit union will be paying about $1,920 per month on the same type of loan after this latest rise, up from about $1,875.

 

The decision to lift rates again, without allowing the previous increase to filtrate the financial system and without taking time to gauge its impact, raises questions about the competence of RBA board members and the quality of the information they are receiving.

 

Stevens’ recent comments suggest this latest rise is a response to his perceptions about the real estate market, which are clearly based on bad information and misinformed media comment.

 

We have a right to expect a greater degree of sophistication from the Reserve Bank.

 

ENDS

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