RBA Likely To Hold Interest Rates Steady

Post by NeilMc on July 6, 2009 · Under Australian Economy, banking · Comment

The Australian central bank, The Reserve Bank of Australia (RBA) will probably leave official interest rates unchanged for the third consecutive month, in response to a mixed bag of economic data. The RBA’s board will meet on Tuesday for its regular monthly interest rate setting meetings.

Analysts however believe that the RBA will indicate that it has room to ease interest rates further given that the outlook for the both the global and domestic Australian economies, remain uncertain.

The global recovery story suffered a setback last Thursday, after a US employment report suggested that the US unemployment rate was hitting a 26 year high of 9.5 per cent.

Australian equities sold off on the news, whilst other asset markets were forced to pare back the expectation that Australian interest rates would rise next year.

Craig James, chief economist with Commonwealth Securities said he believes that the US payroll data has renewed interest in the result of Tuesday’s RBA board meeting. Mr. James added that poor US economic data would dampen speculation that interest rates would rise and that the RBA would confirm its bias towards easing rates.

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