The Reserve Bank of Australia is having it’s monthly meeting in Adelaide tomorrow. There is expectation that rates will be left on hold for yet another month.
Certainly Australia’s economic data shows that our economy has grown at the fastest pace over the past three years. This is quite different to the expected economic results from several overseas countries which may even be going into yet another recession.
As such, AMP chief economist Shane Oliver said he expects the RBA to leave the official cash rate at 4.5 per cent for the fourth consecutive month.
“While a run of stronger than expected economic data culminating in above trend growth in the June quarter adds to the case for a rate hike this is likely to be balanced against uncertainty regarding the global outlook and expectations that inflation is likely to remain within the target range over the year ahead,” Mr Oliver said.
However this is not to say that rates will be keep on hold for an extended period of time. In another month or two the RBA is likely to lift the rates again to counteract excessive spending by the consumers.
“The RBA is also likely to signal that its bias is still to raise interest rates and that above trend GDP growth in the June quarter along with a massive boost to national income from higher commodity prices will have reinforced this.”