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Interest Rates on Hold for Now |
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Friday, 05 October 2007 |
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The official cash rate was left steady at 6.50%pa when the Reserve Bank of Australia (RBA) board met Tuesday for it's monthly meeting. While this comes as good news for home owners the relief may be short lived as analysts predict more rate rises.
Analysts are saying that strong economic growth and growing inflationary pressures could push the RBA to increase rates later this year or early next year. Chief economist with Westpac Bank Bill Evans thinks that interest rates could rise as early as December because of increasing inflationary pressure. He believes we are in a market where we need to think of rates increasing rather than decreasing. "Currently Westpac's forecast is for December. The RBA will see an inflation number on October 24 which will worry them." Said Mr Evans. "The RBA will wait for a while longer to see if any tightening comes out of the markets." Spokesman for Mortgage Choice Warren O'Rourke says the release of the quarterly Consumer Price Index in about 3 weeks time will be vital to the RBA's decision on rates. "I think it will greatly depend on what the inflation figure is," said Mr O'Rourke. "The trouble I think for the Reserve Bank is that their next meeting will be early in November. It is expected there will be a Federal election on or around that time," he said. 
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