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There’s more pain on the way for Australia’s borrowers with the Reserve Bank today raising interest rates for the third time in as many months.

As widely tipped, the central bank lifted its key cash rate by 25 basis points to 3.75 per cent following its monthly board meeting. It’s the first time the RBA has lifted rates three months in a row. (Click here for economists’ reaction, including Michael Pascoe and Peter Martin.)

”In Australia, the downturn was relatively mild, and measures of confidence and business conditions suggest that the economy is in a gradual recovery,” RBA Governor Glenn Stevens said in a statement accompanying the rates verdict. The central bank’s ”gradual” increases in rates will ”work to increase the sustainability of growth in economic activity,” he said.

For a typical mortgage holder on a $300,000 mortgage, today’s rate rise will add about $47 to monthly repayments, assuming commercial banks match the RBA’s move. Officials for most of the major banks this afternoon said their rates policies were under review.

The Reserve Bank has made regular public comments in recent weeks that it sees no need to keep interest rates at ”emergency” levels as the economy rebounds from a slowdown during the past year. Ric Battelino, the RBA’s deputy governor, last week said the economy’s growth is likely to extend ”for a few more years yet.”

More to rises come

Still, the economic data continue to provide mixed readings. A measure of manufacturing activity in November out today showed the sector continues to grow with companies adding jobs, although the stronger Australian dollar slowed the pace of expansion.

Overall building approvals, meanwhile, surprisingly fell 0.6 per cent in October, according to other figures out today. A 5 per cent gain in approvals for private homes was countered by a 19 per cent drop in permits for flats and townhouses.

Even with today’s rate increase, the Reserve Bank’s efforts to tighten monetary policy are likely to be far from over.

”The big change in this statement was their reference to the increases so far as being material,” ANZ’s head of Australian economics Warren Hogan told Reuters.

”I read that as implying that they’re ready to now sit back and watch how these increases affect the economy. And the hurdle for further rate hikes will be much higher than we have seen so far.

“So I think our view that they’re going to 4 (per cent), 4.25 then sit there for much of the year is the right one. There’s every chance they’ll do it in February and March, although I wouldn’t be surprised if it’s dragged out over a number of months.”

JP Morgan’s Chief Economist Stephen Walters agreed that the RBA may make it four rate rises in a row: “With inflation likely to creep up, and the worst in the economy having passed, there is no need to keep rates at very expansionary levels.”

“We think they will again lift rates in February,” Mr Walters

said. ”The RBA does not meet in January, but I think they will hike when they return after the break. The word ‘gradual’ is still there in the RBA statement and I think they will start going slow in lifting after February.”

Before today’s move, investors were betting that rates would rise to at least 4.75 per cent in a year’s time – equivalent to four more rate rises over the period. Three weeks ago, however, the betting was for rates to rise to 5.25 per cent, indicating confidence in the economy’s strength has recently diminished.

The RBA’s board is not scheduled to meet again until next February.

Political view

Treasurer Wayne Swan said the rate rise would pinch household funds.

”This is tough for families…when rates go up it has an impact on the family budget,” Mr Swan told reporters.

He took aim at old comments from new Opposition Leader Tony Abbott that the government’s billion-dollar stimulus had led to interest rates rises.

”That is laughable and it comes from a political leader who is prone to making erratic statements,” Mr Swan said.

”Mr Abbott is in denial of the fact that this country has performed well in the global recession.”

Even with the latest jump, these rates were last seen in 1967, Mr Swan said.

Mild downturn

A year ago, the Reserve Bank was in the midst of a series of deep interest rate cuts as Australia joined other countries in attempting to limit the damage from the global financial crisis.

Last December, the RBA sliced one full percentage point from its cash rate, lowering it to 4.25 per cent on the way to a fifty year-low of 3 per cent by April. After a pause, the central bank has started to lift rates back towards more normal levels as fears of an economic crunch abate.

”The effects of the early stages of the fiscal stimulus on consumer demand are fading, but public infrastructure spending is starting to provide more impetus to demand,” Mr Stevens said in his statement today.

The jobless rate has been one of the surprises, with Australia’s unemployment holding well below 6 per cent when many had predicted a level in excess of 8 per cent. Business investment has also held up well in large measure due to the sharp rebound in China and India – leaving Australia as one of the few countries to start raising rates.

”Prospects for ongoing expansion of private demand, including business investment, have been strengthening. There have been some early signs of an improvement in labour market conditions,” Mr Steven said. ”The rate of unemployment is now likely to peak at a considerably lower level than earlier expected.”

The RBA believes economic growth ”is likely to be close to trend (in 2010) and inflation close to target.

Market response

In the aftermath of the rates news, the Aussie dollar initially dropped before recovering to about 91.5 US cents in recent trading, close to its level before the RBA statement.

Shares, also turned mildly lower before recovering to be about 0.2 per cent higher for the day with less than an hour of trading left.

Source :   www.theage.com.au

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Qantas Airbus operating the QF72 Singapore to Perth flight was struck by lightning soon after departure from Changi Airport, the airline confirmed.

A spokesman for the airline said the incident had not presented any safety issue to the aircraft or passengers.                qantas

The plane landed safely in Perth at its scheduled arrival time of 2.20pm, where it will now be inspected.

“The A330-300 aircraft will be inspected by engineers after landing,” the spokesman said.

“It is too soon to say if any maintenance will be required.”

To allow the necessary checks to be undertaken, the return QF71 flight to Singapore will be delayed by about two-and-a-half hours.

It will now depart Perth at 6pm.

Qantas said passengers booked on QF71 would be provided with refreshment vouchers.

“We will be keeping them informed of developments in the lead up to the departure,” the spokesman said.

Source  :  www.watoday.com.au

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The votes have been counted and WA has again rejected daylight saving.

For the fourth time in 34 years West Australians gave daylight saving the thumbs down.   West Australians have rejected daylight saving in what will be the final referendum during the Barnett Government’s  power.

Results showing No vote has a lead – 531,786 votes against daylight saving compared to 426,531 for Yes to save  daylight saving. sun going down

Premier Colin Barnett post an early vote  placing a ‘Yes’ on his ballot paper, although he said a ‘Yes’ vote was unlikely to win.

Mr Barnett described the poll as a lifestyle issue and said whatever the outcome it would not really effect people’s lives.

The Yes cause fared best in northern coastal suburbs such as Joondalup, Mindarie, Ocean Reef and Hillarys.

In WA’s agricultural region the no vote had a massive 83.84 per cent of the vote.

Three per cent of WA voters were undecided.

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POLICE have charged a 17-year-old boy – a former volunteer firefighter – after a spate of more than 20 deliberately lit fires in the Perth Hills this week.

The teenager has been charged with four counts of arson after he was arrested by detectives from the arson squad this afternoon. bush fire

Police say they expect more charges to be laid over the outstanding fires in the Shire of Mundaring on Tuesday and Wednesday.

The arrest comes after a six-month operation between FESA, the Department of Environment and Conservation and the police arson squad targeting arsonists in the Perth foothills

Detective Sergeant David Gorton said police had focused their attention on the teenager since mid-March.

“We will allege that this young man lit two fires (Wednesday) – one in Hovea and one in Parkerville – in the space of about 15 minutes,” Det-Sgt Gorton said.

“The previous charges relate to February this year in Glen Forrest and then March in Parkerville again.”

It is understood the teenager was a volunteer firefighter when he allegedly lit the Glen Forrest and first Parkerville fires, but he resigned from the position two weeks ago.

“No property was damaged in relation to these fires however, some of the fires were lit in close proximity to houses so there was always a danger that given a wind direction change or other circumstances that property could have been damaged,” he said.

“Certainly there was the potential for property and lives to be lost in relation to what he was doing.”
The teenager has also been charged with five counts of making malicious phone calls to 000 earlier this year.

The maximum penalty for bushfire arson convictions is a $250,000 fine and/or 14 years in jail.

www.news.com.au

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