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Date Published : Tuesday, August 05, 2008
The Reserve Bank of Australia (RBA) has maintained interest rates at their 12-year high of 7.25 per cent - although the scope for a reduction in the future has increased, according to reports.
The Age states that although the RBA's board left rates unchanged, it acknowledged that "demand is slowing", upping the chances that it will adopt "a less restrictive stance of monetary policy" in order to stimulate growth - although it did not say when a cut is likely to come.
Among economic analysts, there is an "almost universal" view that the next time the Bank moves the base rate of interest, it will be to take it down - although there are varying opinions on when that move will take place.
International financial services group Credit Suisse believes there is now a "99 per cent chance" that the rate cut - which would be the first since December 2001 - will come in September, the newspaper said.
However, Stephen Roberts of Lehman believes it could be later still before a change is implemented.
"There is no timeframe. They still talk about uncertainty both ways, in terms of the inflation and the growth outlook," he said.
"I have the sneaky feeling that they will be waiting for November."
Yet whenever the decision comes, home loan customers hoping that reductions will be passed on by their lenders may be in for a disappointment, the Housing Industry Association (HIA) has said.
"Unfortunately there is no guarantee that retail lending rates would fall in line with a potential drop in official interest rates," it warned.
The HIA added that if lenders do not cut their loan rates in response to RBA reductions, the government should launch a review of the mortgage sector to increase the competition between banks.
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