US Interest Rates Raised
Ross Greenwood: Well the US is the biggest economy in the world.
If it’s raising interest rates, then that puts pressure on interest rates in other parts of the world to also rise.
So to give you one really good example, our long-term government bonds – 10-year government bonds.
Now, if you go back into the middle of last year when things look really bleak in Europe, they had a rate on them of 1.8 percent.
Now, these rise and fall with the mood of the world.
Now, 1.8 percent consider that – today’s they sit at 2.9 percent.
So, interest rates – for long-term interest rates in Australia, have already been raised on money markets by one percentage point.
And so, as a result this means now there’s a change in forecast in where rates are going.
Most economists thought this year there would be another rate cut, at least one rate cuts, maybe two.
Now, a lot of those forecasters – National Australia Bank yesterday – said it now believes that there will be no rate cuts this year – but rates will stay on hold.
And in fact, many are saying that there is a rate cut coming certainly, perhaps within 12 months… a rate rise rather – coming within 12 months.
So the mood and what’s taking place in the United States is that rate rises are on the way.
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