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Date Published : Friday, May 30, 2008
The latest data from the Australian Reserve Bank has shown that the level of credit activity is weakening across the country.
Lending to individuals and to businesses has softened in recent months, while overall mortgage borrowing is growing at its slowest pace since the recession of the early 1990s.
During April, the level at which Australian companies were borrowing money rose by only 0.1 per cent and personal credit levels stood still.
The rates of interest within financial markets have been reduced but there is believed to be a general feeling of caution among consumer and institutional borrowers.
Meanwhile, the reserve bank has also revealed that housing credit issued to the investment industry is increasing at the slowest rate since records of the sector began, ABC News Australia reports.
Reflecting on the figures, Adam Carr from UBS predicted that interest rates will be maintained over the course of this year and will not be trimmed until next year.
Mr Carr remarked: "There is hope that in the first half of 2009 ... we could see some interest rate relief on the back of slower economic growth."
"Certainly our expectation is that the bank will cut rates by 50 basis points in the first half of 2009," he added.
Earlier this week, a report from the Australian revealed that the ANZ banking group is expecting to see inflationary pressures prompted by tax cuts and rising commodity prices force the Reserve Bank to increase its official rate of interest twice over the course of this year.
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