 Interest rate rises in the cards
The Reserve Bank of Australia warns consumers that interest rates will rise and that homeowners should expect rate rises to mortgages.
Reserve bank governor Glenn Stevens was speaking at the parliamentary economics committee and said there were factors indicating that the global economy was starting to improve, but we were not out of the woods yet.
Mr Stevens said the downturn in the Australian economy was likely to be one of the least severe in recent history.
"This may well turn out to be one of the shallower downturns Australia has experienced," he said.
“I think people should keep in mind that interest rates will be higher, at least for the variable rate loans,” Mr Stevens said. “Fixed rates have already started going up (and) the yield curve is bidding some of these increases.
Mr Stevens said Australian interest rates had fallen 425 basis points since September last year as the RBA moved to boost our economy and prevent a major downturn as seen in the US. However, Mr Stevens warned new home buyers to prepare for higher rates soon.
His comments propelled the Australian dollar to an 11-month high of US84.77 cents and helped fuel a stockmarket rally, with the benchmark S&P/ASX 200 index rising as much as 1.7 per cent to a 10-month intraday peak in early trading.
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