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RBA’s upbeat outlook fuels fear of rate rise

By Staff Reporter
22 July 2009 | 1 minute read

The Reserve Bank of Australia (RBA) has said the global economy is stabilising and the country can expect to enjoy subdued growth over the next two years.

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In the minutes of its July 7 monetary policy board meeting, released yesterday, the RBA said the economy had been unexpectedly resilient.

“Housing loan approvals had recorded a strong increase, and house prices were again picking up, with the rises becoming more widespread.

“The outlook thus remained for a gradual recovery to begin later in the year, and downside risks to that had diminished,” the RBA said.

The receding threat of a recession has further fuelled speculation that interest rates have now bottomed out.

Over the past week, financial markets have reeled in their expectations of a 0.25 of a percentage point rate cut next month from 25 per cent to 11 per cent.

They are now tipping that the official cash rate will rise from 3 per cent to 3.75 per cent over the next 12 months.

RBA’s upbeat outlook fuels fear of rate rise
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