The Reserve Bank of Australia has kept interest rates on hold for a sixth straight meeting this week but economists still expect a hike in the next few months.
The central bank’s board of directors voted to keep the cash rate steady at 4.75 per cent at its meeting in Sydney on Monday 7th June 2011. The decision met the expectations of the financial markets, which had tipped the prospect of an increase at just 16 per cent.
It‘s the sixth consecutive meeting at which rates have been kept on hold since a 25 basis point hike was ordered at the November 2010 meeting. The floods and cyclones over the summer also resulted in a sharp fall in economic growth in the March quarter, but over the medium term, overall growth is expected to be at trend or slightly higher.
The majority of economists had predicted there would be no move ordered today, especially after official figures published last week showed the economy contracted by 1.2 per cent in the March quarter.
But economists believe that an interest rate rise remains inevitable in the coming months due to the prospect of a sharply rebounding economy – financial markets are pricing in the chance of a move before year-end.