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Rates to remain on hold for a while yet

Economists believe the Reserve Bank will keep rates on hold this week. HSBC economist Paul Bloxham said “HSBC believes rates will remain on hold this month and next. We still expect the next move around mid-year – with May or June pencilled in as most likely – though we are watching the labour market carefully to pin down the timing.

We expect the unemployment rate to drift into the 4’s in coming months, and view this as a necessary condition for a mid-year rate move. We still expect a total of 50bp of tightening this year and another 50bp in the first half of next year. Cash rate set to peak at 5.75 per cent in mid-2012.”

Source: The Advisor

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