Finance advice

RBA may hold rates

By webmaster

The Reserve Bank of Australia (RBA) is expected to keep rates on hold when it meets tomorrow.

Last week’s soft data is encouraging the RBA's board to keep rates on hold. Underlying inflation came in below expectations, while credit data was also weak – with business lending particularly soft.

According to the Australian Bureau of Statistics, underlying inflation for the year to September eased to a five year low of 2.4 per cent – dropping to the bottom half of the RBA’s 2 to 3 per cent target band.

NAB’s group chief economist Alan Oster said based on these results, the board will wait a bit longer for more data to validate their medium term forecast.

“Evidence the economy is growing above trend again should be sufficient for them to hike - a fall in the unemployment rate through 5 per cent on November 11 would satisfy this criteria and make a December 7 rate hike likely,” Mr Oster said.

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