The Courier-Mail

RBA likely to keep cash rate on hold


THE Re­serve Bank is ex­pected to look through re­cent mar­ket tur­moil and hold the cash rate for the fore­see­able fu­ture.

Of 16 econ­o­mists sur­veyed, all ex­pect the RBA to keep the cash rate un­changed at its Septem­ber meet­ing to­mor­row. Only three ex­pect another cut be­fore the mid­dle of next year.

The cen­tral bank cut its in­ter­est rate by a quar­ter of a per­cent­age point in Fe­bru­ary and again in May, tak­ing the cash rate to a new record low of 2 per cent.

Last week, the Chi­nese share­mar­ket suf­fered falls of 7 and 8 per cent over con­cerns about its econ­omy, spark­ing losses in global mar­kets.

The fu­tures mar­ket re­sponded by bet­ting on an in­creased chance of an RBA cash rate cut, with pric­ing for a Septem­ber re­duc­tion go­ing as high as 16 per cent from 6 per cent last week.

But JP Mor­gan Aus­tralia chief economist Stephen Wal­ters doubts the RBA’s in­ter­est rate stance has changed much.

“RBA of­fi­cials are not known for jump­ing at the first ap­pear­ance of shad­ows,” he said.

Mr Wal­ters said the RBA, while stay­ing alert to se­ri­ous shocks from China, will shrug off short-term mar­ket volatil­ity and fo­cus on Aus­tralia’s eco­nomic per­for­mance.

AMP Cap­i­tal chief economist Shane Oliver agreed the do­mes­tic econ­omy was the pri­or­ity. He also said the fall­ing Aus­tralian dol­lar would en­cour­age the cen­tral bank to keep the cash rate un­changed.

 ??  ?? CEO of BHP An­drew Macken­zie at their Mel­bourne HQ.
CEO of BHP An­drew Macken­zie at their Mel­bourne HQ.

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