RBA Cash Rate 2.5% or higher?

Will RBA Rates Rise to 2.5%?

A statement by the governor of the Reserve Bank of Australia (RBA):

“It’s not unreasonable to expect the normalisation of interest rates over the period could see them rise to 2.5 per cent.”
“How fast we will get there will be determined by events.”

Many people, with longer memories, feel lucky that 2.5% is now being considered as NORMAL.

On Tuesday 3rd May 2022, the Cash Rate rose from 0.10% to 0.35%.

Based on the RBA statement we could see that rise again over the year, to that figure of 2.5%.

Is 2.5% RBA rate really that high?

During the 10 year period 2000 to 2009, the lowest rate was 3.00% and the highest was 7.25%.

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Going back a further decade, and we see the NORMAL rate between 4.75% and 17.5%.

January 1990 was 17.5%
February 1990 was 17%
February 1992 was 7.5%
February 1994 was 4.75%
Most of 1994 to 1996 was 7.5%
December 1999 ended at 5%

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