A media release was issued at 2:30pm to announce that the Reserve Bank of Australia has raised the cash rate by 25 basis points to make it 4%.
This change will be effective tomorrow, March 3rd 2010.

Several factors contributed to the board’s judgment to increase rates:

• National conditions in 2009 were not as tough as predicted
• Unemployment rates peaked lower than expected
• Economic growth has been close to trend since the start of the year
• Lenders are relaxing policies to allow for easier borrowing
• Investment in natural resources is strong
   

The first 2 months of 2010 show that foreign economies are stronger, and the world GDP is expected to rise and close at trend pace at the end of 2010. As a result, governments around the world are withdrawing stimulus packages and lessening the degree of financial support.

The board reiterates that “interest rates to most borrowers nonetheless remain lower than average. … With growth likely to be close to 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.”

Read the full press release.