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Interest rate rise delayed by floods

A rate rise may be on the way for Australians but not yet. It seems the Reserve Bank of Australia is unlikely to raise the cash rate when the board meets tomorrow. The impact of the recent floods in Queensland and Victoria, and fires in WA, has dampened the inflation rates, though the “full employment” jobless rate of five percent has been putting the pressure on.

Consumer spending has been soft too, also helping to reduce pressure on rates.The reduction in output of Queensland coal mines as a result of the floods is also helping to ease rate rise pressures.

Even if the central bank decides on Tuesday that cash rates should not increase, there is still a chance that commercial banks will impose an rate increase, out of step with the reserve bank.

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Elayn James

Elayn James

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