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RBA to hold rates steady – for now

07/09/2010

Inflation is rising in Australia but the RBA is not expected to raise interest rates today. Global economic uncertainty and rising Australian dollar will keep the Reserve Bank of Australia from acting. "Inflation is a big risk and it's going to cause a headache for the RBA,” said JPMorgan economist Helen Kevans, "On one side we have a deteriorating global outlook and on the other side, we have local outlook where inflation pressures are quite widespread."

In July, Australia added 24,600 jobs and posted an unemployment rate of 5.3 per cent. JPMorgan has the RBA on hold today and the rest of 2010, Ms Kevans added: "If the global picture picks up and the local economy keeps powering ahead, that may need to change." Brian Redican, senior economist with Macquarie, said a stronger Australian dollar would help ease some of the inflationary pressures.

Source: The Australian



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