Personally, I can’t believe they did.

I mean the recovery is barely underway and with the US still likely to suffer a double dip recession, wouldn’t it make sense to at least let the Australian economic recovery get past a crawling speed before slamming on the brakes again?

Is it not somewhat premature even to think the recovery is even sustainable?

I appreciate the Reserve Bank is worried the Property Market is going to take off and create a bubble, which I agree is a valid concern, however it isn’t hard to at a later date once a recovery is well underway and likely to be sustainable to then increase rates to slow it down.

It also raises the question:

Who voted the Reserve Bank into power at the last election?

I don’t recall them being on the ballot.

So in a democratic society (supposedly) why is a bunch of Bankers who aren’t accountable to the electorate determining what you and I pay on our home loans?

But hey, that’s a whole other topic.

My point is there is little valid reason for the Reserve Bank to not wait until at least Melbourne Cup day in November or later to start raising rates.

Plus them thinking simply raising rates will stop the Property Market booming isn’t accurate either.
Low interest rates are only one reason why Property Prices are on the rise again.

Raising interest rates doesn’t solve the demand for more houses than what the Construction Industry can build and the shortage of cheap land available due to the State Government’s greed which are the main drivers of Property Price Growth.

And do we really need a higher dollar?

Absolutely not.

And raising rates and being the first major economy in the world to do so simply will put further upward pressure on the Aussie dollar.

This isn’t good for our exporters or rural industries.

(Ok, I do own rural companies so it does affect my hip pocket personally when the dollar rises and interest rates rise in my rural companies and as a Property Investor of course I’d like low interest rates forever too. But taking away any biases I may have, I still feel the Reserve Bank has acted prematurely and without necessity).

The higher dollar is great if we are going for a holiday to the US, but if the Reserve Bank keeps this up then Australians won’t be able to fly to the US as the holiday money they’ve been saving will have to go now to pay their higher mortgage or rental payments.

I’d like to know your thoughts.

Has the Reserve Bank gone crazy and acted too early in raising rates?