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Next rate rise delayed

Next rate rise delayed

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Staff Reporter

National Australia Bank has revised its rate forecast for 2011, pushing the first rate rise for the year back to August.

NAB’s macro economist John Sharma said ongoing softness in underlying inflation and the economy had forced the major to revise its initial rate forecast.

“Our rate rises have been delayed from May to August, with the final adjustment to 5.25 per cent in November. The risk of an earlier or larger rate adjustment lies with faster growth and especially any sign of wage pressures from tighter labour markets or higher flood related prices,” Mr Sharma said.

However, this is unlikely to happen as Mr Sharma said orders for farm products and minerals remains weak and capacity utilisation is still trending sideways.

As such, Mr Sharma said annualised domestic demand should slow further to 2 per cent and even lower for non-farm GDP.

Staff Reporter

National Australia Bank has revised its rate forecast for 2011, pushing the first rate rise for the year back to August.

NAB’s macro economist John Sharma said ongoing softness in underlying inflation and the economy had forced the major to revise its initial rate forecast.

“Our rate rises have been delayed from May to August, with the final adjustment to 5.25 per cent in November. The risk of an earlier or larger rate adjustment lies with faster growth and especially any sign of wage pressures from tighter labour markets or higher flood related prices,” Mr Sharma said.

However, this is unlikely to happen as Mr Sharma said orders for farm products and minerals remains weak and capacity utilisation is still trending sideways.

As such, Mr Sharma said annualised domestic demand should slow further to 2 per cent and even lower for non-farm GDP.

Next rate rise delayed
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