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Rates Up Growth Down

As a reminder that economies run in cycles no matter how good consumers feel, the Reserve Bank today raised the Cash Rate to 5.5%pa from 5.25%pa. It was last at this level in March 2001. Bank standard home loan rates were around 7.5% to 8%pa just prior to then, compared to 7.05% in January 2005.

Australia's economic growth (GDP) was also reported today for 2004 and is down to 1.5%pa (just barely positive at 0.1% in December quarter) from 4%pa in 2003. A recession is two quarters of negative growth - but no one is talking about recession at this stage.

Posted Wednesday, 2 March 2005

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