The Reserve Bank has decided to keep the cash rate at 4.5%, much to the relief of homeowners Australia wide. The cash rate has now been kept steady for 3 months, though economists still believe that interest rates will reach 5% before the years end.
Reserve Bank governor Glenn Stevens said that while the current interest rates are at the right levels given Australia's economic conditions, he expects inflation to reach higher levels at the end of the year:
"Through to mid 2011, underlying inflation is likely to be in the top half of the target zone, while CPI inflation will probably be just above 3 per cent for a few quarters due to the impact of the tax changes and increases in utilities prices."
The Reserve Bank has taken interest rates from 3% last October to their current rate of 4.5% with 6 interest rate rises.
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