RBA to hold
The Reserve Bank is expected to keep rates on hold when it meets next week.
Loan Market Group’s chief operating officer Dean Rushton said dampened consumer sentiment and the economic impact of the devastating floods across the country should result in interest rate stability for at least the first half of 2011.
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Mr Rushton said it was also highly unlikely that the RBA would hit mortgage holders with a repeat of last year when it increased the cash rate four times to its current level of 4.75 per cent.
“With so much uncertainty about the economy, it is hard to see the central bank playing an aggressive role with interest rates during 2011,” he said.
“The last thing most Australians need after the events of recent months is an interest rate rise.
“Mortgage holders, particularly those also having to contend with repairing flood affected homes, would be crushed to also be hit with interest rate increases.”
Mr Rushton said the RBA will need a few more months to examine the impact of the floods among other economic factors.
