Christmas rate hike is unlikely – RBA

THE Reserve Bank of Australia (RBA) has indicated that the cash rate is likely to stay at its current level of 4.75 per cent for the rest of the year, a parliamentary committee has heard.

Reserve Bank of Australia (RBA) governor Glenn Stevens said market forecasts of a rate rise in February next year were realistic.

“For the period in which we are going into in the near term, I think that the monetary policy setting is about the right level,” Mr Stevens told the House of Representatives Standing Committee on Economics.

“At the moment most commentators and market pricing do not anticipate any sort of near term change by us for quite some time and I think that’s probably a reasonable position for them to have based on the information we have now.”

Pundits predict rates may stay on hold until at least April.

Citi senior economist Joshua Williamson said the RBA was likely to keep rates on hold “for a good four to five months now”.”Since they did go (increased rates) in November we’ve seen the unemployment rate rise, we’ve seen the housing finance data remain weak and (the construction and investment) partial data suggests that the GDP will be a little bit weaker than probably what the consensus was expecting,” Mr Williamson said.

“Not only will they not go in December but it’s unlikely we think they’ll actually go in the first quarter of next year.”



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