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| RBA unlikely to raise rates soon: Expert | |
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MELBOURNE: Home-owners are unlikely
to be hit with another interest rate increase after the latest inflation
rise but may have to wait another 12 months before any reprieve from
existing rates, the chief of a leading bank said. The Australian bureau of statistics revealed last week that the consumer price index (CPI) grew 1.3% in the March quarter for an annual rate of 4.2%, and up from 3% in the year to December. ANZ chief economist Saul Eslake yesterday said the Reserve Bank of Australia (RBA) had been pre-emptive in dealing with inflationary pressures over the past nine months and was unlikely to raise rates in the short term. “I think they will probably look through this figure even though it was higher than what they were expecting,” Eslake told Sky Business News. “If they hadn’t raised interest rates in March for a second consecutive month I’d say we probably would be looking at a rate hike in May. “That March increase was taken in the knowledge that inflation would be four per cent or thereabouts in March.” However, homeowners will have to wait until at least the middle of next year until they receive a reprieve in the form of interest rate cuts, Eslake predicted. “I don’t think there was ever any realistic chance of them (RBA) cutting rates before about the middle of next year and if there was any chance at all, however small, then I think that has been knocked out by the bad news of this week,” he added. – AFP “That’s been the impact of it, not to significantly increase the likelihood that they would raise rates but instead to diminish to the point of zero the probability that they would be cutting rates this year.” - AFP |
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