Image: Stuart Hay, ANU
Australia's official interest rates should remain on hold for December, but the likely need for a rate hike in six months is increasing, according to the ANU Shadow RBA. The Reserve Bank of Australia (RBA) will meet on Tuesday 4 December to review interest-rate settings, which have been at a record low of 1.5 per cent since August 2016. There are some encouraging signs for Australia's economic outlook, with the unemployment rate remaining low and wage growth finally ticking up slightly. However, Chair of the RBA Shadow Board Dr Timo Henckel says this wage growth will need to be sustained in the future to ease household budget constraints. "The RBA Shadow Board rules out any likelihood that a reduction in interest rates could be called for," Dr Henckel said. "It attaches an unchanged 53 per cent probability that holding interest rates steady at 1.5 per cent is the appropriate setting, while the confidence in a required rate hike equals 47 per cent." Australia's growth rate still stands at 0.9 per cent for the June quarter, while CPI inflation fell to 1.9 per cent in the September quarter, just below the Reserve Bank of Australia's official target band of two to three per cent. The Aussie dollar has bounced back from the recent lows and is currently trading around 73 US¢.
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