The official cash rate is likely to stay on hold for the foreseeable future, according to leading industry stakeholders.
Last week, AMP’s chief economist Shane Oliver said the minutes from the Reserve Bank’s latest Board meeting reinforced the position that the RBA is comfortable with the current monetary policy setting.
“In Australia the minutes from the RBA’s last board meeting and parliamentary testimony from Governor Stevens just reinforced the position that given the downside risks to global growth but with Australian growth around trend and inflation expected to be around target, the RBA is comfortable with current interest rate settings for now,” Mr Oliver said.
“We still see more rate cuts but it may not be for a few months. It’s also clear from question time that Governor Stevens is rightly not keen on intervening to cap the Australian dollar at this point partly on the grounds that its not particularly overvalued and it’s not clear that it would have much impact.”
Mr Oliver’s comments were echoed by Mortgage Choice chief executive officer Michael Russell who last week said it was all but certain that the Reserve Bank would opt to keep the official cash rate on hold for the rest of the year.
“We expect the cash rate to remain steady for the remainder of the calendar year. If the Reserve Bank were to move, history dictates we will see a 25 point cut in November to give consumers some breathing space during the Christmas break,” Mr Russell said.
“But, I think Glenn Stevens will be keeping his powder dry.”