On Tuesday the Reserve Bank of Australia decided to leave the official cash interest rate unchanged, surprising many analysts who had been forecasting further rate cuts. In fact there is now the suggestion that interest rates may remain stable for the remainder of 2012.
Towards the end of 2011 there were fears that European economic instability and the chance of a double dip recession in the US may continue to destabilize the global outlook and lead to further rate cuts. The intensity of these issues has now subsided to the point where the RBA is comfortable to maintain interest rate stability.
Not everyone agrees with the decision to leave interest rates on hold, with Westpac chief economist Bill Evans voicing his concerns.
”We need lower interest rates to arrest that disturbing trend. That would help with the labour market. I don’t think Australia needs the highest rates in the Western world.”
Mr Evans is also predicting the Australian economy to grow by just three per cent in 2012, along with the unemployment rate rising to 5.75 per cent. Chief economist of JP Morgan in New York, Bruce Kasman, indicated that the world economy is lifting and expects the US economy to grow by 2.5 to 3 per cent this year.
Already the Bank of Queensland has lifted their standard variable interest rate 0.1 per cent, despite the official decision for rates to remain steady. For Australian home owners the advice is to evaluate your current home loan and shop around for other mortgage products that may better suit their needs.
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