RBA points to further rate rises

The Reserve Bank has indicated that it will raise interest rates again to dampen soaring household debt. In its quarterly statement the bank gave a positive forecast for Australia's economy, predicting strong growth for the nation and the world with a local inflation rate of just 1.5 per cent this year. Despite the positive report card however, the RBA stated that interest rates are still “accommodative” to consumer borrowing, even after two rate rises late last year. It says price pressures will rise during 2005 and monetary policy needs to take this into account. The bank's immediate objective is to keep inflation to within 2-3 per cent and it remains concerned about household debt. In the September quarter 2003 the average household spent almost 9 per cent of its income servicing debt – and the December quarter is likely to be even higher.