Economists conflict over rate rise
(26 February 2010 – Australia) With the RBA’s next decision on rates just around the corner many economists are estimating a rise in rates; however some believe that they will remain steady.
The Reserve Bank of Australia earlier this month shocked the nation by leaving interest rates unchanged after hiking rates three months in a row.
However, domestic data revealed since the last meeting of the central bank has indicated strength and RBA officials as a result have been hawkish, highlighting the resources boom and demand from Asia for Australian export.
Many industry bodies have conflicting views over the central bank’s move for the beginning of March; of 23 economists surveyed 16 said that they expect the central bank to lift the cash rate to 4 percent.
With the cash rate at 3.75 percent, economists estimate the bank has another 50-100 basis points to go before policy is back in the neutral zone.
However, interest rate dealers have only priced a 45 percent chance of a hike when the policy-setters meet next week.
Stephen Roberts, chief economist at Nomura Bank in Sydney, said that he expects the RBA to again pause, citing sovereign risk concerns and slowing global growth.
However, domestic data revealed since the last meeting of the central bank has indicated strength and RBA officials as a result have been hawkish, highlighting the resources boom and demand from Asia for Australian export.
Many industry bodies have conflicting views over the central bank’s move for the beginning of March; of 23 economists surveyed 16 said that they expect the central bank to lift the cash rate to 4 percent.
With the cash rate at 3.75 percent, economists estimate the bank has another 50-100 basis points to go before policy is back in the neutral zone.
However, interest rate dealers have only priced a 45 percent chance of a hike when the policy-setters meet next week.
Stephen Roberts, chief economist at Nomura Bank in Sydney, said that he expects the RBA to again pause, citing sovereign risk concerns and slowing global growth.
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