Uncertainty for the official cash rate in 2010
22 July 2009
Debate has commenced on predictions over how the Reserve Bank of Australia will behave in 2010 with economists and market analysts split between a predicted rise and further declines to the official cash rate.
Yesterday's release of the Reserve Bank's July meeting minutes resulted in predictions from outside economists that markets are priced in expectation of the cash rate climbing from 3.0 percent to 3.4 percent in 2010 while others stated that this may not be the case with predictions of even more rate cuts as the Reserve Bank's response to the impending unemployment rate and slowing economy. Currently, Australian interest rates are at their lowest in 49 years.
Some major banks economists are even predicting the official cash rate to slip to 2.25 percent in as little as six months.
Expected to be discussed in the meeting were Australia's stance in the Global Financial Crisis, projected inflation issues, interest rates, and any benefits from the federal government stimulus package and the impact of the rising unemployment rate.
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