Investment commentator and author of the recently released book ‘Understanding the Investment Clock – Your Road to Recovery’, Rod North, says it is still too early to raise interest rates further, as the economy is only just beginning to recover from the financial crisis.
Supporting comments made by ANZ CEO Mike Smith, that it might be too early to raise rates as the economy is still fragile, North said: “Despite a range of indicators, only just beginning to show a trend for growth into 2010, many companies and individuals will not be able to fully recover unless the RBA shows some restraint with the timing of its further monetary policy adjustments.”
North added that the government and the Reserve Bank risk getting it wrong if “the balance of fiscal and monetary stimulus is not calibrated appropriately.”
“Following the recent increase in the cash rate in October by 25 basis points and another increase expected tomorrow of a further 25 to 50 basis points, it is still too early in the cycle to begin the rate hike. More time is needed for recovery as part of the economic healing process”, he said.
The board is expected to make its decision on Tuesday 3 November at 2:30pm.
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