Tuesday, February 02, 2010

RBA Rate Freeze Will Mean More In The Future

Contrary to the expectations of virtually all analysts -including me-, the Reserve Bank of Australia decided against raising interest rates at today's meeting. However, given the obvious signs of overheating it is clear that more rate hikes will be needed, something the RBA itself acknowledges. Today's inaction might mean that even higher interest rates will in the end be needed as the excesses will become even bigger than if interest rates had been raised today.