|
Bank leaves rates on hold The Reserve Bank has left interest rates on hold at 6.25 per cent, despite widespread predictions that they would go up for the first time this year. The decision to hold interest rates comes despite strong retail and housing figures. Analysts had been divided about the chances of a rate rise. Some argued strong recent economic data would push the Reserve Bank into action, but others said it should wait for more indicators. The odds appeared to shorten two weeks ago when Reserve Bank assistant governor Malcolm Edey suggested that the board would look at inflation on a monthly basis. But while the bank hiked rates three times last year in a bid to deal with growing inflationary pressures and a very tight labour market, this month it has left the official rate unchanged. The Australian dollar fell below 81 cents on the news, but three-year bond futures rose. Prime Minister John Howard has welcomed the news and says interest rates are on average much lower under his Government than under the previous Labor government. But he told Adelaide commercial radio that he could not guarantee that rates would not rise in the coming months. "I think homebuyers will be happy they haven't gone up although people who invest their money might have a different view," Mr Howard said. "The bank controls interest rates, we don't set them. The Government determines policy that creates the environment in which interest rates are set." Westpac's global head of economics Bill Evans has warned that it is only a matter of time before another rise. "I think it has been a cautious Reserve Bank that has decided to wait to see," he said. "I think the strength of the sales numbers we saw earlier in the week indicate that it's very likely that after we do see this next inflation number that the bank will decide to move again. "So I think it's really a matter of waiting a few more weeks before we see the next move." The bank will next meet to discuss interest rates on May 1. |
