Greek crisis could halt RBA hike

By Mozo ·

The deepening economic crisis in Greece is likely to halt the Reserve Bank of Australia’s (RBA) current policing of raising interest rates, it has been predicted.

Global markets fell dramatically this week when Greece’s credit rating was downgraded to "junk" status, suggesting the country will find it impossible to pay back its $430 billion national debt.

Speaking to the Daily Telegraph, Westpac chief economist Bill Evans suggested that the instability caused by Greece’s downfall had already prompted the RBA to show caution earlier this year.

"The lessons from the surprise pause in February, which was we believe significantly influenced by the surprise developments in Greece, probably signal that with rates so close to the normal level the bank can afford to wait until June," he added.

Recent figures pointing to higher than expected levels of inflation had prompted some experts to predict the RBA would once again hike the official cash rate, which currently stands at 4.25 per cent.

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