RBA 'may hike rates in August or later'

Friday 01 July 2011

Article by Mozo

The Reserve Bank of Australia (RBA) is unlikely to increase the cash rate in July but may do so in August or the final quarter of the year, it has been suggested.

RBA 'unlikely to increase rates in July'

Paul Bloxham, chief economist at HSBC, told the Australian that he forecasts a rise in August, but noted that it could be later than this.

His prediction tallies with recent comments by the governor of the RBA Glenn Stevens, who asserted that July is unlikely to see any alterations in the cash rate.

However, while August may see an increase in interest rates, Mr Bloxham noted that there is a significant chance that it will come later than this.

"Recent weaker domestic indicators – particularly softer employment growth and business conditions – as well as more subdued global conditions, provide some risk to this time frame," he asserted.

Currently, the cash rate is at 4.75 per cent – the level set in November 2010 – but the next meeting of the RBA board to discuss changes will be early this month.

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