Australian Interest Rates On Hold, But To Rise

The interest rates have stayed on three percent level in Australia already the 5th month consecutively. But it is obvious that it won't go like this in the light of the apparent global recovery.

"This [hold on rates] will be certainly welcomed by homeowners and by small business," he said. "Of course, as Governor Stevens has said, rates are at emergency levels right now and at some stage in the future they can be expected to move."

The problem, or actually the issue is that the banks are smart. Which is good. They are careful not to raise the interest rates so they don't hurt the recovery. This is the right direction that Australian economy moves and the banks seem to be in accord with the rates hold.

However, we have observed that this was not really the case in USA. The mortgage rates have been fluctuating. When rates were down, applications go up. When the mortgage applications go up, rates go up to. But banks should remain smart and not raise the rates not to dampen the economic growth.

"Because of the lessons of the past - both during the Great Depression and also in the early 90s - governments around the world, including central banks, are very cautious to not dampen the recovery, which is still fragile," said Fariborz Moshirian from the University of NSW.

Written by Armen Hareyan
Materials from ABC Australia are used in the report.