With yesterday's rise in interest rates, the RBA is the only Central Bank which is: 1) raising rates; 2) doing so in recognition of an improving global /USA outlook; and 3) is anticipating the future bouyancy of the global and USA economies.
In contrast to the RBA's performance yesterday, the NZRB (Reserve Bank of New Zealand) kept rates on hold today.
And, tonight, the Bank of England has kept rates on hold @3.75% in the UK.
What does this mean?
A bold gamble by the RBA which, if it comes unstuck, is likely to precipitate a rapid deterioration in domestic economic conditions in the back half of next year.
Even bolder, as a gamble, given that the RBA is now out of synch with most other Central Banks.
Simply put, the RBA has adopted an aggressive stance to curbing whatever excesses it considers that the financial system needed to be purged of. In doing so, it raised rates going into the Christmas season whereas 2 other Central Banks (which last month also raised rates) have adopted a wait and see approach.
All 3 Central Banks are next due to meet and decide upon their next rate movements in February of next year.
