The outcome of the Reserve Bank of Australia's monthly board meeting on interest rates has been announced.
NAB chief economist Alan Oster said the RBA is waiting to see if it can “fill the hole” created by the fall in mining business investment, according to a statement from finder.com.au.
“[The RBA is] still waiting to see if the consumer is going to be spending more; they need to see what's happening in the property market; and they also need to get a better handle in terms of what's happening in the labour market,” Mr Oster said.
“So at this stage, they've done a lot – they don't want to do any more and they're sitting and waiting,” he said.
BIS Shrapnel associate director, economics, Richard Robinson said the RBA would like to cut rates to engineer a decline in the Australian dollar, but an overheated housing market is preventing a rate cut.
AMP Capital chief economist Shane Oliver also said strong housing related indicators are providing a reason “not to cut rates further”.
However, the rest of the economy is “sub-par”, Mr Oliver said.
“Uncertainty remains high regarding how quickly the mining investment boom will unwind, inflation is benign and the Australian dollar remains too high – all of which suggests it's premature to start raising rates,” he said.
“The most recent commentary from the RBA has indicated that a period of stability in rates remains prudent.
“This language is likely to be dropped well before the RBA starts hiking rates,” he said.
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