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Rate rises keep inflation in check: PM

The strong Australian economy has been saddled with the blame for the recent interest rate rise.

It seems even the Prime Minister was expecting the Reserve Bank of Australia (RBA) to announce this week that it was raising the official cash rate (OCR) again. Which it did, taking the official rate to 6.25 per cent, the highest level since 2000.

Mr Howard pointed out on Monday that interest rates are still historically low, and that the reason they have gone up (three times in one year) is because of the strength of the economy.

The RBA said in its announcement, in fact, that the earlier rises, in May and August, had not been sufficient to balance inflationary pressures due to a strong economy, both in Australia and worldwide.

For those homeowners whose mortgages are affected by movement in the OCR, this week's decision will add around $40 more to the monthly repayments (on an average loan of 250,000).

- interest, rate, rise

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