By Ashley Smith – Australia’s economy grew at a faster than expected rate last quarter, climbing 0.9% from the 3rd quarter. The better than expected result help solidify the notion that the Australian economic recovery is sustainable, underscoring the central bank’s decision yesterday to boost interest rates for the 4th time to 4.00%.
The GDP figures lend support to the central bank’s decision to raise interest rate as evidence mount that the monetary stimulus is no longer required, boosting expectations that a continuation of tightening of the monetary policy is expected. Faster than anticipated growth was key reason policy makers increased the overnight cash rate target to 4 % yesterday while signaling for a possibility of further future hikes.
The Australian Dollar traded near its strongest level in a decade against the New Zealand Dollar as Australian economic growth proves to be much stronger than that of New Zealand. Australia’s currency traded at NZ$1.3037 from NZ$1.2980 yesterday. The Aussie rose to 90.58 U.S. cents after touching 90.84 cents, the highest since Feb. 23. The currency was little changed at 80.05 Yen.
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