RBA Interest Rates Rise 25 Basis Points in April

Reserve Bank Increases Interest Rates by Quarter Percent in April

The Reserve Bank has hiked interest rates by a quarter of one percent or 25 basis points at their April board meeting. The latest rise brings the cash rate to 4.25%. This rise is the second in a row for the RBA, after raising rates by 25 basis points in April as well as three consecutive rises of the same amount in the last 3 months of 2009.

Standard variable home loan rates for most of the major banks will now rise to over 7%. The National Australia Bank is the only one of the majors to confirm that it wont lift rates any higher than the move by the RBA. No comment is yet in from the ANZ, Commonwealth or Westpac Banks.

The RBA has moved to deal with growing confidence in the Australian economy and fears of rising inflation and steady growth in the property market. In the statement from Reserve Governor Glenn Stevens said that "The Board judges that with growth likely to be around trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average. Today’s decision is a further step in that process."

Governor Glenn Stevens has pointed to more interest rate rises over the course of 2010. Commentators have suggested that they believe the cash rate will be closer to 5% or even greater by the end of the year.