Hold and wait the best policy for rates- Shadow RBA
The ANUā?RBA Shadow Board believes interest rates should follow a hold-and-wait pattern in June, with benign domestic economic indicators and another possible quarter of economic contraction. The board of the Reserve Bank of Australia (RBA) will meet on Tuesday to review official interest rates, which have been at a record low of 1.5 per cent since August last year. Chair of the RBA Shadow Board Dr Timo Henckel said the economic outlook had little direction from overseas or from the May federal Budget, while Australia's consumer and business confidence remain modest. "Recent revisions to economic forecasts by leading financial institutions reveal that another quarter of economic contraction, following the September quarter 2016, may be on the cards," Dr Henckel said. "Last month's budget is unlikely to significantly alter the outlook, nor are the developments overseas. The RBA Shadow Board continues to advocate a hold-and-wait policy." He said inflation at 2.1 per cent is comfortably within the RBA's 2-3 per cent target band. But export commodity prices have fallen and mining investment is forecast to fall further.
