Reserve Bank leaves rates on hold

THE Reserve Bank has left rates on hold but hinted this reprieve for home borrowers is likely to be temporary.

The board voted to leave the cash rate on hold at 4.5% for the fifth month in a row.

Michaels’ Real Estate agent Alisdair McLure said the decision was good for the Bundaberg region.

“A lot of people are struggling a lot at the moment with general costs of living,” Mr McLure said.

“It’s good news for owners and people who are looking to buy.”

RBA governor Glen Stevens said rates were likely to go up as part of a possible pre-emptive strike against inflation.

“If economic conditions evolve as the board currently expects, it is likely that higher interest rates will be required, at some point, to ensure that inflation remains consistent with the medium-term target,” he said in a statement accompanying the rates decision.

The central bank cited Australia’s rising terms of trade – the ratio of export to import prices – as a “very substantial” driver of national income.

Private demand and business investment were also seen to be improving as the effects of government stimulus measures wore off.

Lending growth, however, was more subdued despite evidence of some greater willingness to lend, the RBA noted.

Inflation rose by 3.1% in the June quarter, putting price pressures slightly outside the central bank’s two to three per cent tolerance band.



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