THE Reserve Bank of Australia (RBA) has today raised official interest rates to 5.75 per cent from 5.50 per cent as inflation continues its steady rise with fuel costs.
The Reserve Bank of Australia (RBA) last raised interest rates in March 2005.
The RBA sets interest rates to keep inflation below 3 per cent. Inflation stood at 3 per cent over the year to March 2006, rising gradually with higher fuel prices and other goods and services.
The RBA governor Ian Macfarlane said the economy was growing strongly, which was feeding inflation.
"International developments are continuing to provide stimulus to growth in Australia. "The world economy is growing at an above-average pace ... commodity prices have been increasing strongly for some time, and they have risen further in the year to date. This suggests a strengthening in the outlook for Australia's export earnings, with consequent expansionary effects on incomes and spending," Mr Macfarlane said.
"Wages growth, though not accelerating further recently, is higher than it was a year ago, and businesses are continuing to report that suitable labour is scarce," he said.
"Consumer price inflation has picked up to around 3 per cent in recent quarters. While this partly reflected rising fuel costs, underlying consumer price inflation also increased in the March quarter, to around 2.75 per cent, a rate it had not been expected to reach until the second half of the year."
