No further need for official interest rate rises in 3 to 9 months

MingDeng

The Westpac-Melbourne Institute's leading index of economic activity has registered an annualised growth rate of 2.1 per cent for May, and indicates a growth rate substantially below trend for the next three to nine months.

The fall in the leading index over the past six months is the sharpest decline since early 2001.

Westpac says the index implies a substantial easing in spending and demonstrates that there is no further need for official interest rate rises.

黑山老妖

现在好像在说要减息了。不过就算央行减息也不等于银行减息啊。

beibei2006

bloody banks..
try to pay off earlier.

MingDeng

The Governor of the Reserve Bank of Australia (RBA) has expressed confidence inflation can be subdued over the period ahead.

Addressing a charity function in Sydney, Glenn Stevens said the challenges for economic and interest rate policy looked more difficult now than they had been for a while, but he said the bank remained committed to achieving its inflation target of 2 to 3 per cent over the economic cycle.

He pointed out that inflation had been outside the target range for extended periods in the past.

Mr Stevens then said that in the current episode, inflation looked like remaining above 3 per cent for nine consecutive quarters.

But he said the chances of keeping inflation low over the medium term were good and would involve a period of significantly slower growth in demand.

Mr Stevens also gave implicit assurances that official interest rates will not be kept high for longer than they need to be, saying inflation had moved outside the bank's target range before.

"You shouldn't be waiting till it's really obvious inflation's gone all the way back down to where we'd like it to be before you conclude you've got to start easing," he said.

"You should be easing before that day, just as you should be tightening before the day that inflation clearly gets going."

MingDeng

The interest rate set by commercial banks has to within certain gap comparing to one by reserve bank, from internal and external pressure by reserve bank (federal government).

MingDeng

Commonwealth Bank chief executive Ralph Norris has defended lifting interest rates "out of step" with the Reserve Bank.

Australia's biggest home lender has lifted its standard variable rate home loan from 9.44 per cent to 9.58 per cent.

The big banks have all announced further rate rises even though the Reserve Bank kept official rates on hold this month.
Mr Norris has told a gathering of the Australia-Israel Chamber of Commerce that it has had to put rates up to offset the increased costs of wholesale funding.

"There has been some commentary that banks have been taking advantage of the situation I want to assure you that is certainly not the case," he said.

"The fact of the matter is that banks here in Australia have largely had to absorb - particularly in the mortgage market - a significant proportion of that increased cost of funding."

Mr Norris also has not ruled out further interest rate rises independent of the Reserve Bank if pricing goes up internationally.

"If rates continue to remain high or increase there is always a risk that there will be further out of sequence increases," he said.

"But certainly that's not something we do lightly it's a matter of looking at the situation and for most of the last 12 months we've actually absorbed a significant amount of that additional cost."

MingDeng

Carbon trading won't hurt interest rates: Swan

Federal Treasurer Wayne Swan says he does not expect the inflation caused by an emissions trading scheme to push interest rates up.

The Government predicts the introduction of the scheme will result in an inflation increase of about 0.9 of a per cent.

Mr Swan says Reserve Bank Governor Glenn Stevens has already indicated the scheme will not be a factor in the board's deliberations on interest rates.

"He's made the very simple point that the one-off impact of the introduction of a carbon pollution reduction scheme would be 'looked through', to use his language, by the Reserve Bank," he said.

"In other words [it] would not necessarily be taken into account when they are making their decisions on what is occurring with inflation over the longer term."