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Publish date: 01-10-2009 22:39:48 | Contact Name: Pascal | 188 times displayed
While the effects of the cash stimulus paid to the Australian population held up consumer figures in the months past we now see the the first positive Australian economic consumer market indicators after the cash stimulus has worn off.
Market analysts now predict that Australia will see a first interest rate rise before Christmas 2009. Treasurer Wayne Swan states he expects interest rates to rise with the federal fiscal stimulus measures being withdrawn until the end of 2009.
While many portions of the stimulus will continue, namely the small business investment allowance and the increased first home owners grant will come to an end. Currently the home owners grant is twice its original size for established homes at $14,000 and even three times the pre financial crisis level for new developments. As of January 1, 2010 these will be scaled back to the original incentive of $7,000.
The current interest rates are the lowest they have been in 49 years and are labeled as an emergency measure which needs to adapt to the recovering economy or else the risk of inflation will increase dramatically.
The RBA released statements in September 2009 indicating that the worst of the Global financial crisis may be over, quoting directly: "The period of most intense stress in global markets extended over the six months from September 2008 to March 2009. This period was marked by steep declines in world equity prices, exceptionally large risk premiums in a range of markets and serious dysfunction in wholesale credit markets."
The RBA goes on to state how resiliant the Australian economy and particularly the banking system has come through the crisis. If these current trends continue it is to be expected that the emergency level the current cash rate is at will start to rise in the coming months in an effort to return to more normal levels of interest rates in Australia.
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