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Savings Account Holders See Cash Rate Unchanged
The Reserve Bank of Australia has decided to keep the rate of interest fixed at 4.5 per cent.
Saving account holders across the country are likely to be encouraged by the latest decision by the Reserve Bank of Australia (RBA), which was to keep the cash rate of interest fixed at 4.5 per cent.
The institution cited a number of reasons not to raise rates this month, with consumption spending modestly increasing and indications of an upcoming rise in business investment.
Outstanding credit for housing is still expanding solidly, although prices for homes are going up at a slower pace than they did last year. This combines with a slight growth in wages, as well as a firmer labour market - but the consumer price index is likely to be over three per cent in the near-term, the RBA explained.
As a result, keeping the cash rate fixed at 4.5 per cent - as part of the overall monetary policy strategy - is resulting in interest rates maintaining the average they have done over the past ten years.
The RBA said this is "appropriate" for the current time, pending more data regarding local and international demand for prices and demand.
Treasurer Wayne Swan commented on the decision and said it was a positive piece of news for families and businesses whose budgets had already been severely tested in recent months, News.com.au reports.
Citigroup managing director of investment and research analysis Paul Brennan also remarked on the decision, saying the RBA has "not changed their forecast for growth, they have slightly nudged up their inflation forecast but they don't see that as a trigger to raise interest rates".
However, other Australian banking critics pointed to evidence suggesting that a hike in rates was not far off. If employment levels go up then this will put pressure on the RBA and cause concern over what inflationary effects this would have, the online publication added.
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