Interest Rates

Australian interest rates see a possible election interest rate rise as a result of yesterday’s inflation economic data. The Consumer Price Index figures released showed headline inflation rose by 0.7 per cent in the September quarter - for an annual rate of 1.9 per cent inflation for the Australian economy.

The dictionary definition of "interest rate" is: the cost of borrowing money. The interest rate is often expressed as an annual percentage of the principal. There is more than meets the eye than just the one number. Interest rates are used by a country's national bank (Such as The Fed in the USA or the Reserve Bank of Australia or RBA) as part of their monetary policy to either stimulate growth or slow down the expansion of an economy.

The Reserve Bank of Australia (RBA) Raises Interest Rates by 25 basis points to 5.75 per cent; Aussie dolar spikes: The Reserve Bank of Australia (RBA) raised the interest rates for Australia by 25 basis points to a 5 year high and the first . Lifting the benchmark official cash rate to 5.75 per cent from 5.5 per cent credit tightening in 14 months. The Aussie dollar spiked 50 pips on the announcement of the interest rate rise at 9.30am AEST, hitting US$0.7660 cents.

Did you know that the interest rate in Zimbabwe is 800%? Wouldn't it be cool if you can deposit your money there in Zimbabwe - say $10,000 of your total savings and by the end of the year receive $80,000 in interest? Haha... The question is would your investment be safe? I think not. I guess Zimbabwe is simply desperate for some foreign investment to be offering such a high interest rate.

I received an offer through the post of 6.40% p.a. interest on any new deposits on top of my current deposits for a three month promotional period with INGDirect. INGDirect's current interest rate is 5.40% p.a. meaning if you invest in this technique you would get $54 for every $1000 you deposit a year. But let's say you got suckered into this promotion and you had a spare $2000 lying in your other bank account. So you log onto their internet banking website and transfer over your $2000, lured by the additional 1% p.a. offering that INGDirect was promoting. Now that additional $2000 over the three month period that the promotional interest rate is valid for will earn you $32. ($2000 x 6.4% x 3 / 12)

The Aussie dollar has added more than half a US cent since Tuesday amid speculation that the US Fed may not be quite done lifting rates. The dollar gained momentum throughout the night supported by commodities and gold. At 7am the Aussie was at US 75.14¢, Tuesday's close was at US75.12¢. The US Fed reserve raised interest rates to 4.5 per cent the highest since April 2001. The statement issued by the Fed was scrutinised by investers to interpret any futher information indicating any future interest rate direction.