RBA to keep rates on hold until July, says ANZ

By Mozo ·

The Reserve Bank (RBA) will not lift the official interest rate until the second half of this year, a leading economist has said.

Responding to the RBA's board meeting earlier this week at which it kept the official cash rate at 4.75 per cent, ANZ head of macroeconomics Katie Dean suggested that rates would stay on hold until July.

RBA governor Glenn Stevens explained on Tuesday (February 1st) that the net additional demand from rebuilding after the Queensland flood disaster was unlikely to have a major impact on "the medium-term outlook for inflation" and that the central bank was comfortable with the current interest rate setting as a result.

Commenting on the statement, Ms Dean told the Herald Sun: "They've reaffirmed their previous expectation that inflation will remain within the two to three per cent target band for the next 12 months and I think what that means is that we're probably going to see interest rates on hold for some time now, at least for the first half of this year."

However, HSBC's Paul Bloxham commented that the RBA had been very careful in its wording so as to avoid ruling out the possibility of "a monetary policy response" to the flood impact.

Have a question about interest rates? Ask the money gurus at Mozo Answers.ADNFCR-1761-ID-800383645-ADNFCR