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The outlook for Australian interest rates – up, down or sideways?
Oliver's Insights - The outlook for Australian interest rates - up, down or sideways?
This article looks at the outlook for Australian short-term interest rates. The key points are as follows:
- Raising interest rates in response to the worse than expected June quarter inflation result would be a major mistake. Global uncertainties are high, inflation outside food and fuel is weak and Australian households remain extremely cautious, which is dampening housing demand and retail sales.
- The strong Australian dollar (A$) is another reason not to raise rates. Having broken above US$1.10, the A$ looks like it's on its way to around US$1.20 to $US1.30.
- Against the backdrop of the mining boom and inflationary pressures on the one hand, but global uncertainty, weak household sentiment and the strong A$ on the other, the most likely outcome is an extended period of rates on hold.
For a copy of this edition of Oliver's Insights, please download the file below. (Acrobat Reader is required to view the file.)
Source: AMP
Wealthsure Pty Ltd (ABN 93 097 405 108) nor Seagrims Pty Ltd, make no representation or warranty as to the accuracy or completeness of any statement including, without limitation, any forecasts. The opinion of AMP does not necessarily reflect the opinion of Wealthsure Pty Ltd or Seagrims Pty Ltd.
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