By Jonathan Watson

Australia yesterday raised interest rates to 4.75%, up 0.25% from previous.

The Australian economy is really benefitting from a global upsurge in raw material requirements, predominantly from Asia and is also benefitting from a strong housing market.

The interest rate rise reflects the confidence in their economy and will make the Aussie look even more attractive to investors.

Against sterling I would not be suprised to see the rate go towards 1.50 in the next few months, particularly as the UK’s economic recovery is still precarious. A recent report from the CIPD – Chartered Institute of Personel and Development suggests unemployment could go significnatly higher than previous (government) estimates.

Either way uncertainty looks set to continue in the UK, whilst the Aussie is very secure. If you are looking to buy Aussie’s even if in a year or two years, it may be best to book a rate now. I had clients who never believed it would drop below 2. then 1.80, and then 1.60!

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