The Reserve Bank of Australia (RBA) raised interest rates on Wednesday, causing the Australian dollar to reach a fresh 23-year high. The domestic currency hit 93.74 US cents at 1330 AEDT - its strongest level since April 4, 1984 when it closed at 93.93 US cents.

The RBA lifted official interest rates on Wednesday morning by a quarter of a percentage point to 6.75 percent. This has brought rates to their highest level since November 1996. Prime Minister John Howard has apologised to borrowers for the consequences of today’s rise, but Treasurer Peter Costello insisted that rates have only gone up because Australians have never had it so good.

This is the first time that the rates have changed during a campaign election. However, Mr Howard said Australians should remember the ballooning inflation under the previous Labor government.

“Even with the increase announced today, they (interest rates) are still lower than at any time under the previous government and close to two percentage points lower than what we inherited in 1996,” he said.”Certainly less than half the notorious peak of 17 per cent under the former government.”

Mr Howard said the RBA’s statement demonstrates the government does not influence central bank decisions.

“You can see this is a very authentic and credible statement of the economic facts because it has come from the governor of a central bank who has just demonstrated very powerfully the complete independence of that central bank,” Mr Howard said. “If anybody thinks for a moment something in this statement is designed to serve the interests of the government they couldn’t be more wrong.”

Mr Howard stressed the Australian economy was not on “auto-pilot”.

“I’m not saying for a moment the sky is about to fall in, that would be ludicrous,” he said. “We have very strong growth prospects because the fundamentals of this economy are so strong and so stable, but keeping it that way is going to be much harder because of some of these domestic pressures, many of which are the product of our very prosperity.”

Mr Howard again said interest rates would always be lower under the coalition than under a Labor government. “I say that unashamedly, directly and unconditionally,” he said. “I’m looking forward. If Labor wins this election interest rates will be higher than if the coalition wins.” “They have been in the past and they will be in the future.”

The US Federal Reserve cut interest rates by 25 basis points to 4.5 per cent on Oct 31, which widened the interest rate differential between Australia and the United States.

Meanwhile, following a downward trend of the U.S. dollar’s value, the Malaysian Ringgit depreciated against the Australian dollar (AUD) (1.98 to 3.12 to the MYR) for the past six years (December 2001 to November 2007) as of November 7, 2007.