Rates look certain to rise again in March and again throughout 2008, with minutes from February's RBA Monetary Policy Meeting revealing that the outlook for inflation has deteriorated further than anticipated.
The minutes from the meeting released yesterday made known that the RBA board seriously considered lifting rates by 0.5 per cent earlier this month, rather than 0.25 per cent.
The members of the RBA’s board considered the larger move on the grounds that “the inflation outlook had deteriorated and the risk of inflation expectations becoming dislodged had increased.”
According to the RBA, the decision to vote in favour of a smaller rise of 25 basis points was made with the wellbeing of borrowers in mind.
There was concern that home buyers had been slapped with an additional 90 basis points in just nine months – some of which were independent of RBA’s monetary policy.
“Members noted that an argument in favour of a rise if only 25 basis points was that the level of rates faced by borrowers had already risen somewhat over the summer, independently of policy action,” the board’s minutes said.
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