RBA to tackle tough questions on rate rises

RBA to tackle tough questions on rate rises

13 August 2009 by Staff Reporter 0 comments

Some of Australia’s federal politicians will grill the Reserve Bank of Australia (RBA) on the likelihood of a mortgage rate increase.

The twice-a-year, three hour hearing will be held at Sydney’s Tattersalls on Friday, where RBA governor Glenn Stevens and his team will be questioned by members from both sides of parliament.

Nomura Australia chief economist Stephen Roberts today told AAP that he expects parliamentarians to pin Mr Stevens down on when rates will likely rise given the recent change in its policy stance.

"My guess is that he will be very cagey in answering that question and will want to leave a fair bit of flexibility," he said.

He expects the RBA will keep the cash rate on hold until early 2010.

"That's simply because you did have 110,000-odd people who took up the (increased) first home buyer grant. They've got whopping mortgages and are going to be highly vulnerable," Mr Roberts said.

Recent central bank commentary has dropped the prospect of a further reduction in the cash rate, which stands at 49-year low of 3.0 per cent.

Some of Australia’s federal politicians will grill the Reserve Bank of Australia (RBA) on the likelihood of a mortgage rate increase.

The twice-a-year, three hour hearing will be held at Sydney’s Tattersalls on Friday, where RBA governor Glenn Stevens and his team will be questioned by members from both sides of parliament.

Nomura Australia chief economist Stephen Roberts today told AAP that he expects parliamentarians to pin Mr Stevens down on when rates will likely rise given the recent change in its policy stance.

"My guess is that he will be very cagey in answering that question and will want to leave a fair bit of flexibility," he said.

He expects the RBA will keep the cash rate on hold until early 2010.

"That's simply because you did have 110,000-odd people who took up the (increased) first home buyer grant. They've got whopping mortgages and are going to be highly vulnerable," Mr Roberts said.

Recent central bank commentary has dropped the prospect of a further reduction in the cash rate, which stands at 49-year low of 3.0 per cent.

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