Interest rates remain steady again!

Thursday 6 May, 2004

After its monthly meeting on Tuesday the Reserve Bank of Australia elected to leave interest rates unchanged at 5.25% for at least one more month. This will be the fourth consecutive monthly hold for interest rates although many economists believe another rise is inevitable.

Economists believe the decision was made as a result of a combination of factors including, the decision this week by the US Federal Reserve Bank to leave their official cash rate on hold for another month.

It is likely the Reserve Bank will also be keeping a close eye on property markets, trade deficit figures and employment before it makes any future decisions.

The Australian dollar hit a seven year high at US 80 cents in February which put pressure on exporters. Since then the Aussie dollar has fallen to around US 73 cents, still well above US 40-50 cent lows recorded in 2000.

Some say another influence on the Reserve Bank’s decision was the anticipated income tax cuts which the Federal Government is expected to make as part of their pre-election budget next Tuesday.

 

Related articles:

• Price falls that made the Reserve Bank home in on housing
• Keeping interest rates on hold a welcome decision for the industry
• Housing bubble bursts: Reserve Bank of Australia
• Prices of units tumble but houses bear up