Finance News Direct To Your InboxMake sure you are kept up to date with the latest finance news by joining our email subscription list. We’ll keep you informed with product news & interest rate updates from our panel of lenders, real estate reports on growth areas with investment potential, as well as the latest economic reports from the analysts & economists we trust. Click here to join. |
|
|
May Decision: Rates on Hold |
 |
 |
 |
|
Wednesday, 02 May 2007 |
The Reserve Bank of Australia (RBA) announced Wednesday 2nd May that interest rates would remain on hold following Tuesdays RBA board meeting. While this is a welcome relief for home owners, economists are still warning that an increase before the end of the year can't be ruled out.
Only a few weeks ago it seemed that a rate increase for May or June was almost a certainty. This outlook changed dramatically with the release of lower than expected inflation figures last week. This fall in inflation figures was not expected by many economists or the Reserve Bank, which was concerned over rapid growth in consumer lending, business lending and the pace of retail sales. Inflation may temporarily be in check, with the Consumer Price Index increasing only 2.4%, falling within the Reserve Banks 2%-3% comfort zone. However, the strength of the Australian economy means that inflation is still a real danger and if prices and wages do start to head higher the reserve bank will apply the brakes by increasing interest rates. "we still believe the view is the next move is up rather than down," said Citigroup senior economist Annette Beacher. While inflationary pressures mean the possibility of a rise is present the general consensus is that rates will remain on hold until later this year after the federal election. 
|
|
