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Date Published : Thursday, January 31, 2008
The Reserve Bank of Australia may resist temptation to increase interest rates next month as a result of the continuing global financial instability, an industry expert has suggested.
After November's rate hike saw the base-rate hit an 11-year high of 6.75 per cent, many analysts were predicting another increase in February, which would affect consumers with home loan and credit card bills.
However, recent events in the world economy - which saw severe dips in the global stock markets - may persuade the Reserve Bank to keep rates stable for the time being, according to David Potts, of the Sun-Herald.
Rising inflation, increasing levels of credit card debt and a fluctuating housing market could all influence the Reserve's decision, Mr Potts claimed.
Writing in his weekly column for the newspaper, Mr Potts stated: "It's true that Australia is running at full capacity and our biggest inflationary threat is homemade. That's a wage push of which there's no sign, not from where I'm sitting, anyway.
"The Reserve has been saying for a while inflation will rise in the first half of the year."
Earlier this month, a number of major financial institutions separated from the Reserve Bank's interest rate decision and increased the levels of interest charged on variable home loans.
ANZ, National Australia Bank, Commonwealth Bank and St George's were among those that increased rates charged on loans, in order to recoup financial losses which occurred as a result of the global credit crunch.
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