RBA Says Economy to Accelerate Even as Rates Increase

from MoneyTrading.com.au

Australia’s central bank said economic growth will continue to accelerate this year even if policy makers are forced to raise the interest rate by another three quarters of a percentage point.

The economy will be growing at an annual pace of 3.25 percent in the three months through December 2010, up from 2 percent last quarter, the bank said today in Sydney. Officials based their forecast on an assumption that the overnight cash rate target will climb to 4.5 percent this year, in line with market estimates.

Australian Dollar Drops After Reserve Bank Unexpectedly Leaves Rates On Hold

from MoneyTrading.com.au

The Australian dollar dropped after the central bank unexpectedly left rates unchanged, ending a record set of interest-rate increases. Reserve Bank of Australia Governor Glenn Stevens’ decision to keep benchmark borrowing costs unchanged at 3.75 percent wasn’t forecast by any of the 20 economists in a Bloomberg News survey. Australia’s business confidence fell in December to the lowest in six months, a private report showed today, a sign the bank’s previous three straight increases are damping sentiment.