From Reuters:
How long before others follow suit?
SYDNEY (Reuters) - Australia's central bank raised its key cash rate by 25 basis points to 3.25 percent on Tuesday, as surprising economic strength allowed it to withdraw some of the exceptional stimulus doled out during the global credit crisis.
How long before others follow suit?
Their housing bubble has yet to burst, and theirs makes the US' pale in comparison. I predict this will expedite the popping of it.
In other odd interest rate news, Sweden is trying Mankiw's suggestion of a negative interest rate. I believe the reasoning behind it is flawed on two fronts: First it assumes banks cant transfer their excess reserves into a liquid asset that doesn't come with an interest rate penalty such as government bonds, and secondly it doesn't solve the problem of the problem of consumption stifled due to increased savings preferences / weak demand for more debt. It is a demand side problem. Any increases to the supply side without increasing demand side is likely to cause deflation.
According to Bloomberg News reports US household wealth increased by $2 trillion in the second quarter as equity markets made rapid gains. It should not be more than 6 month before the Fed will follow the suit.