Rate rises good for Australia

A strong central bank prepared to raise interest rates has helped Australia avoid the worst problems of the global financial crisis said a senior international banker yesterday.

Jaime Caruana, general manager of the so-called central bankers' bank said the Reserve Bank's interest rate policy in 2003 rightly erred on the side of tightness in the face of strong growth in house prices and credit. "There was concern in some quarters at the time that this was straying from the goal of price stability. In light of experience, this shading of interest rate policy is better interpreted as having realised the Reserve Bank's stated goal of price stability over the business cycle."

Source: Sydney Morning Herald