Reserve raises rates to check inflation

As widely tipped the Reserve Bank has increased the official cash rate by 0.25 per cent. The governor of the RBA Glenn Stevens said that the increased demand in the economy over recent months combined with a continued decline in unemployment were the key factors behind the decision. While the higher currency exchange rate has had a dampening effect on the local economy the high CPI figure for the June quarter indicated a less favourable near-term outlook. Also taken into consideration were the global economy and financial markets with credit markets a downside risk for the US economy.

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