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Building up, rates to come down

By Reporter 29 July 2013 | 1 minute read

A gain in June building approvals is expected to be seen in data that will be released tomorrow. However, we're still likely to see another rate cut, according to a leading economist.

AMP Capital’s head of investment and senior economist, Shane Oliver, recently said he expects tomorrow’s building approvals to report a two per cent gain, “to continue the rising trend”.

However, he also noted that growth in private credit is likely to have remained modest.

Despite the upwards trend of building approvals, Mr Oliver explained that a rate cut is still possible due to the factor of inflation.

“The bottom line is that inflation is comfortably contained in the RBA's [Reserve Bank of Australia's] two to three per cent inflation target range and while it does not guarantee a rate cut next month, we think it will be enough to get the RBA over the line - particularly given the softness in data for retail sales and business conditions, the rise in unemployment and the weak news out of China that we have seen since the last RBA board meeting,” he said.


“Another rate cut will also likely be needed to maintain downwards pressure on the [Australian dollar].”

This comes as senior economist for the Housing Industry Association, Shane Garrett, has called for another cut.



Rates refer to a fixed price or an amount charged by sellers or providers for their goods and services.

Building up, rates to come down
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