RBA freezes rates, economists predict same trend until 2011
As anticipated by many economists, the Reserve Bank of Australia (RBA) has opted to maintain the country's interest rates on its current level, the fourth consecutive months that the cash rates have been stationary, with a rise last seen in May this year.
A Bloomberg survey showed 25 economists unanimously predicted that the RBA would further pause for the present rate of 4.5 percent following the six upward surges that the central bank has effected from last year up to May this year in order to combat inflation and push its level to a more manageable band of two to three percent.
That same level of inflation was reported by the Australian Bureau of Statistics to have hovered on the nation's economy by the end of the June quarter, registering and underlying inflation of 2.7 percent while a succeeding private study had reported in last month that underlying inflation was only running at 2.3 percent in the year to August.
It was almost automatic that the September cash rates would remain frozen as announced today, with a great majority of the nation's financial institutions now boldly asserting that the current rate would stand still at least until the end of November.
Many economists are now toying with the idea that the official inflation figure set to be released in the latter part of October would hardly leave a dent on RBA's plans for any rates movements on the last quarter of 2010, with some even predicting that the central bank would push for a hold on cash rates until the early parts of 2011.
The latest move effectively threw some form of reprieve for many Australian homeowners as RBA Governor Glenn Stevens was convinced that the present levels of lending rates were also reflective of the average levels seen in the past decade.
Mr Stevens stressed that "with growth in the near term likely to be close to trend, inflation close to target and with the global outlook remaining somewhat uncertain, the board judged this setting of monetary policy to be appropriate for the time being."
As a direct result of RBA's decision to freeze the interest rates, economists said that major banks should be carrying standard variable mortgage rates of between 7.24 and 7.51 per annum at least for the remaining part of the year, that is if they gravitated towards replicating the central bank's move and opted not to lift the rates on their own.