By: Mike Campbell
Many analysts had predicted that the Reserve Bank of Australia (RBA) would increase the cost of borrowing by a further quarter percentage point when its board met this week. Australia was the only developed nation not to slip into formal recession during the recent economic turmoil and it was the first country to increase the bank interest rates and has made three increases since October 2009. In the event, the board decided to keep Aussie interest rates at their current rate of 3.75% - an astoundingly high level compared to that on offer in the UK, Eurozone, Japan and the USA where rates are all below 0.6%. The move disappointed the FOREX community and the Australian Dollar has weakened against the majors as a result. The bank said that it wanted more time to evaluate the effect of foregoing rises, but cautioned that the rate would rise if inflationary pressure was seen to be increasing. The head of research at National Australia Bank, Peter Jolly, has predicted that the RBA will increase the rate by one percentage point over the course of the year
Russia’s Economy Shrinks by 7.9% In 2009
Last year marked the worst economic performance for 15 years in Russia with the economy contracting by 7.9% (the authorities had predicted a figure of 8.5%, so it was not quite as bad as they feared). Largely to blame, in addition to the global recession, was a fall in export revenues from sales of oil and gas as demand fell from consumers within importing nations. However, a downturn was also seen in other sectors such as the catering industry, manufacturing, construction and hotels. Analysts are optimistic that Russia will return to growth in 2010.