CommSec welcomes RBA rate rise

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By Robert Carry

Securities firm CommSec has welcomed yesterday's move by Reserve Bank of Australia, saying it "strikes a nice balance" between the need to return rates to normal levels and the demands of the economy.

"It is prudent to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker," said Craig James, CommSec chief economist.

The comments came after the RBA increased interest rates for the second consecutive month, lifting the cash rate from 3.25% to 3.50%.

James added that he expected the RBA to continue to increase the rate in 25 point increments. However, he was not convinced that the RBA would implement a third consecutive monthly rate rise in December.

"It is far from certain that rates will rise again in December. The Reserve Bank has never lifted rates for three consecutive months, although it did cut rates five consecutive times late last year and early this year in the midst of the global financial crisis," he said.

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