In a move widely expected by economists, the Reserve Bank of Australia (RBA) elected to keep the official interest rate at the record low level of 2 percent when it met on October 6. This decision marks the sixth month that the RBA has kept interest rates steady.
“The board today judged that leaving the cash rate unchanged was appropriate at this meeting,” read a statement issued by the RBA. “Further information on economic and financial conditions to be received over the period ahead will inform the board’s ongoing assessment of the outlook.”
While the RBA’s statement sheds little light on what the future might hold, official markets suggest there is a 50/50 chance interest rates will fall before the end of the year, and a 29 percent chance they’ll fall in November. However, many economists don’t expect interest rates to change until the first half of 2016 at the earliest. The RBA’s neutral comments mean that even these financial experts are unsure whether interest rates will rise or fall when they do move.
If interest rates do eventually rise, Craig James, Commsec’s chief economist, says they won’t rise soon.
“It is far too early to be talking about rate hikes given that inflation is still low and broad economic growth rates are below normal,” he told the Sydney Morning Herald.
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