 Reserve Bank will increase rates again
Despite justifications to keep interest rates on hold, that includes the continued drop of first-home buyers, the Reserve Bank is poised to increase rates again.
Shane Oliver, AMP Capital chief economist said this indicates the raise is bordering on factors such as the boost up of national income coming from rising iron ore and coal prices, and the five month development in the labor market over which dropped off unemployment to 5.3 per cent.
"To leave rates on hold would be a better decision, but I'm not confident that's the decision the RBA will make," Dr Oliver said in an interview.
Senior RBA and governor Glenn Stevens had been openly forecasting that rates will go higher on his recent interviews and speeches. Last week he warned people to be cautious about how much they borrowed because rates are likely to rise.
"We cut interest rates to what we call emergency settings when we had an emergency," governor Stevens he said in an interview. “Once the emergency has passed and things gradually look more normal, then it's not wise to leave interest rates down at rock bottom any longer than we need.”
In a separate interview, ANZ Bank chief executive Mike Smith told The
Australian last week that they would not rule out ANZ raising mortgage rates by more than any RBA adjustment. He said on the other hand that it was in the interests of the bank and the economy to keep rates as low as possible, given the fragile nature of the global economic recover.
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