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JP Morgan Predicts Rates To Stay On Hold
Oct 03, 2011 - Eric Smyth
Stephen Walters economist from JP Morgan has joined forced with other economists and also predicted that interest rates will remain on hold for more than a year, as global growth stalls and volatility continues to rock the market.
Interest rates have been on hold since Melbourne Cup 2010.
The Reserve Bank is due to hold its next meeting to decide interest rates on Tuesday.
Chief economist Harley Dale from the Housing Industry Association felt that there was a good enough reason for the RBA to reduce rates to 4.25 percent to boost consumer confidence and spending levels, but stated that he didn't think that they would.
The RBA is concerned about inflationary pressures from the mining boom and is expected to leave rates on hold for the time being, unless the global economy worsens, or if the China boom strengthens then interest rates will rise.
Mr Walters also stated that Australia was experiencing the longest period without a rate rise, and that although the financial turmoil on the global markets was hurting household wealth, that was still insufficient reason for the RBA to cut rates, even if unemployment reached 5.5 per cent next year.
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