Finally the Reserve Bank of Australia seems to have realised that they are out of sync with the rest of the world and has not raised rates at its December meeting, instead deciding to leave rates unchanged.
This follows rises in August and November which has seen the Australian Cash Rate set at 6.75%.
Interest rates have remained remain fairly steady even though we have had 10 consecutive rises since rates hit a low point of 4.25% in December 2001. These rises have been spread over the six year period making it very manageable for borrowers to adjust, unlike our firends in America who were hit with significant shifts upwards almost on a monthly basis.
That had a lot to pushing the US into the Sub Prime issues it now faces, and Australia's Federal Reserve is finally acknowleding that this should have a flow on effect to reduce or hold rates in Australia.
"The Board remains concerned about the outlook for inflation. But given the heightened uncertainty about the international outlook and the local trends in wholesale borrowing costs, both of which could have a bearing on inflation over the medium term, it judged that the current stance of monetary policy should be maintained for the time being" was the closing comment in the Media Release from Glenn Stevens, Governor Monetary Policy of the Reserve Bank.
This leaves the door open for a potential rate cut at the next meeting in February, which is a definate possibility as US Rates have been cut 0.75% in recent times with another 0.25% cut expected in December, and UK rates having gone down as well with the likelihood of more to come.
So Australia has been against the trend and may now choose to follow suit depending on the global situation and inflation over the coming months.
With two months now to sit back and watch, the Reserve Bank will have the opportuity to review its past increases and hopefully correct them with a New Years present of a rate reduction in February, the first since December 2001 and a welcoming present to newly elected Prime Minister Kevin Rudd.
This follows rises in August and November which has seen the Australian Cash Rate set at 6.75%.
Interest rates have remained remain fairly steady even though we have had 10 consecutive rises since rates hit a low point of 4.25% in December 2001. These rises have been spread over the six year period making it very manageable for borrowers to adjust, unlike our firends in America who were hit with significant shifts upwards almost on a monthly basis.
That had a lot to pushing the US into the Sub Prime issues it now faces, and Australia's Federal Reserve is finally acknowleding that this should have a flow on effect to reduce or hold rates in Australia.
"The Board remains concerned about the outlook for inflation. But given the heightened uncertainty about the international outlook and the local trends in wholesale borrowing costs, both of which could have a bearing on inflation over the medium term, it judged that the current stance of monetary policy should be maintained for the time being" was the closing comment in the Media Release from Glenn Stevens, Governor Monetary Policy of the Reserve Bank.
This leaves the door open for a potential rate cut at the next meeting in February, which is a definate possibility as US Rates have been cut 0.75% in recent times with another 0.25% cut expected in December, and UK rates having gone down as well with the likelihood of more to come.
So Australia has been against the trend and may now choose to follow suit depending on the global situation and inflation over the coming months.
With two months now to sit back and watch, the Reserve Bank will have the opportuity to review its past increases and hopefully correct them with a New Years present of a rate reduction in February, the first since December 2001 and a welcoming present to newly elected Prime Minister Kevin Rudd.
