 Rate predictions
When the Reserve Bank meets later today all eyes are on the official cash rate and whether it will move upwards.
Home owners have been bracing themselves for a rate hike, as recent data indicated job advertisements are on the rise and housing markets are looking steady.
The financial markets now predicts there could be a rate rise as early as today, or by November. If official interest rates rise by 25 basis points it is practically a given that home loan rates will rise too. A 25 basis point increase on a $300,000 mortgage would add an extra $45 per month to repayments.
Just as recently as last week most economists were predicting rates would rest on hold until November. However some are now cautiously waiting for today's rate announcement.
Treasurer Wayne Swan is pleased but cautious about the improved job ad numbers. Figures from ANZ job ads series showed ads in newspapers and on the internet had increased by 4.4 per cent last month. "It shows the second improvement in two months. That's welcome, but what we do know is that these figures are still substantially below their levels 12 months ago," Mr Swan said.
"We know the global economy is fragile. That is why everybody needs to work together in this environment."
RBA Governor Glenn Stevens has already hinted that the current emergency rate setting could not last.
The Reserve Bank board meets today for their monthly policy meeting and the announcement over rates will come at 2.30pm AEDT today.
Gratton Institute says the global financial crisis could be all but over, once most economies start rising rates from their emergency low settings. Gratton economist Saul Eslake said rates that remain low run the risk of causing a housing bubble.
Market predictions are recorded on the ASX Target Rate Tracker, and today the chance of an official interest rate movement jumped to a 59 per cent chance of a 25 basis point increase in rates at today's meeting.
This is up from Friday's prediction of a 22 per cent chance of a rate rise. The current rate of 3 per cent is at a 49-year low and has rested at this rate since April of this year.
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