Interest rates to remain on hold, suggests RBA

The Reserve Bank of Australia (RBA) has suggested that interest rates will stay on hold over the coming months.

According to its quarterly statement of monetary policy, the central bank expects Australia’s economy to have reached growth of four per cent in the year to December 2012.

The AAP news agency has claimed that this statement points towards an extension of the current pause in interest rate rises, particularly as underlying inflation is forecast to stay at 2.75 per cent until the end of 2011 before edging up to three per cent in 2012.
It also referenced the RBA as stating that: “Fiscal policy will be subtracting from growth in the period ahead.”

“The main downside risk on the domestic front is that the forecast pick up in private demand occurs more slowly than expected and does not fully offset the contraction in public spending over the next few quarters,’’ the statement reads.

On Tuesday (August 3rd), the RBA kept the official cash rate on hold at 4.5 per cent after claiming that current interest rates are around the average level of the past decade.

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