16 Dec 2009

RBA creates 'breathing space' over interest rates

9:54 pm on 16 December 2009

The Australian Reserve Bank says its decisions to raise interest rates for three consecutive months will give it some breathing space when it considers the level of rates throughout next year.

In the minutes from its board meeting two weeks ago, the RBA described the arguments both for and against a rise of quarter of a percentage point to 3.75% as finely balanced.

The minutes highlight the growing strength in Asian economies and the flow-on benefits for Australian resources.

The board also notes that conditions in the United States are improving and that, overall, growth in the Australian economy has been much stronger throughout this year than expected.

It points out even with the October and November rate rises, most lending rates were still below normal levels.

The RBA also says these successive rate rises will increase its flexibility at future meetings.