Next rate rise delayed
Investors and home buyers may not face another rate rise until as late as August according to the latest forecasts from National Australia Bank.
NAB has revised its Reserve Bank cash rate forecast for 2011, pushing the first rate rise for the year back from May to August.
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NAB’s macro economist John Sharma said ongoing softness in underlying inflation and the economy had forced the major to revise its initial rate forecast.
“Our rate rises have been delayed from May to August, with the final adjustment to 5.25 per cent in November. The risk of an earlier or larger rate adjustment lies with faster growth and especially any sign of wage pressures from tighter labour markets or higher flood related prices,” Mr Sharma said.
This however is unlikely to happen as Mr Sharma said orders for farm products and minerals remained weak and capacity utilisation was still trending sideways.
As such, Mr Sharma said annualised domestic demand should slow further to two per cent and even lower for non-farm GDP.
