^{Wednesday 5th May 2010}

 Australia’s central bank has raised benchmark interest rates for the sixth time in 6 months, putting more political pressure on Kevin Rudd’s Labor party.

The latest 25 point rise in rates comes as the government suffered the worst rating in the polls since Rudd took power from the Liberal/National coalition in 2007. The rise will again increase the cost of variable mortgages and it is anticipated that the electorate may blame the government’s wider economic policy.

The bank is attempting to contain inflationary pressures as economic recovery gathers pace on the back of Chinese demand for iron ore, coal and other natural resources. Government statistics show that house prices have surged by 20% in the quarter ending March, compared with the same period in 2009. Sydney and Melbourne has been the most affected with house prices rising 28% and 21% respectively.

Australia became the first of the G20 nations to raise interest rates last year after the onset of the financial crisis. The country did avoid technical recession by recording a quarter of growth during the downturn.

If you would like more information about how interest rates affect your investments, please contact us.

_{Source: Australia raises benchmark rate to 4.5%, Ft.com, 05/05/2010}