Another interest rate rise in the next six months remains possible, according to recent testimony by RBA governor Glenn Stevens at a parliamentary economics committee.
Speaking at the House of Representatives Standing Committee on Economics, Finance and Public Administration on the Gold Coast on Friday 17 August, Stevens said that the main risk to the Australian economy remains inflation, rather than the current turmoil in financial markets.
He added that while there is concern about the current distress in financial markets brought on by the US sub-prime crisis, at the same time both the Australian economy and the world economy in general are proving to be “surprisingly” strong this year.
“The picture is one of growth close to trend, and the economy remaining close to full employment,” Stevens said.
“Under such circumstances, inflation is likely to be around 3% over the coming year, and near the top of the target zone in the following year.”
The RBA’s decision to increase their inflation forecast for 2007 to the upper limit of its target band, up from 2.5%, indicates that there may be need for another rate rise late this year or early next year, with Stevens saying that in the context of the federal election, the RBA would move rates "whenever it sees fit".
“As far as risks to that forecast are concerned, the possibility that the world economy might end up being weaker than assumed, due to a persistence of credit difficulties, is one that everyone will have in mind at present,” Stevens said.
“At the same time, there’s also the possibility that ongoing strength of demand in a fully employed economy might leave us with inflation pressure that is harder to manage than expected.”
Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker
Top Suburbs :
Get help financing your investment
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local expert Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus, our mortgage broking service is at no cost to you.
We value your privacy and treat all your information seriously - you can check out