Sunday, January 17, 2010

Why Australia Faces More Interest Rate Hikes

In this article in The Australian it is explained why the Reserve Bank of Australia will face more interest rate increases (Just like Israel and probably also China). While I disagree with some of the implicit theoretical arguments of why inflation will rise, the point is that the Reserve Bank of Australia believes in them, meaning that they will continue to raise interest rates. This is bullish for the Australian dollar, though the upside potential is greatly limited by the fact that it has already rallied so much.