Rates on hold till October: AMP

Rates on hold till October: AMP

06 August 2012 by Staff Reporter 0 comments

Staff Reporter

With the Reserve Bank widely expected to hold rates when the Board meets again tomorrow, economists are starting to contemplate when the next potential rate cut could happen.

According to AMP’s chief economist Shane Oliver, the Reserve Bank will wait until at least October before moving again on rates.

“Even though inflation is at the bottom of the RBA’s target range, recent commentary from the RBA has indicated a relatively relaxed stance on the economic outlook and various economic data releases over the last month including for retail sales and house prices have indicated a somewhat stronger tone,” he said.

“Ultimately, we see the RBA resuming rate cuts again around October as growth indicators return to a softer tone and inflation remains benign, but for now we expect the RBA to remain in wait and see mode.”

Mr Oliver said economists would no doubt look at the RBA’s Statement on Monetary Policy for clues as to how long the wait and see mode might last.

In late July, Real Estate Institute of Australia (REIA) president Pamela Bennett said the inflation result should give the RBA room to cut the cash rate - which stands at 3.50 per cent - in August.

“The latest figures are well within the RBA’s target zone of 2-3 per cent and should provide a clear message to the RBA to further reduce official interest rates,” Ms Bennett said.

Staff Reporter

With the Reserve Bank widely expected to hold rates when the Board meets again tomorrow, economists are starting to contemplate when the next potential rate cut could happen.

According to AMP’s chief economist Shane Oliver, the Reserve Bank will wait until at least October before moving again on rates.

“Even though inflation is at the bottom of the RBA’s target range, recent commentary from the RBA has indicated a relatively relaxed stance on the economic outlook and various economic data releases over the last month including for retail sales and house prices have indicated a somewhat stronger tone,” he said.

“Ultimately, we see the RBA resuming rate cuts again around October as growth indicators return to a softer tone and inflation remains benign, but for now we expect the RBA to remain in wait and see mode.”

Mr Oliver said economists would no doubt look at the RBA’s Statement on Monetary Policy for clues as to how long the wait and see mode might last.

In late July, Real Estate Institute of Australia (REIA) president Pamela Bennett said the inflation result should give the RBA room to cut the cash rate - which stands at 3.50 per cent - in August.

“The latest figures are well within the RBA’s target zone of 2-3 per cent and should provide a clear message to the RBA to further reduce official interest rates,” Ms Bennett said.

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