Finance Finance News Interest rates likely to remain steady on conflicting economic data

Interest rates likely to remain steady on conflicting economic data

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Official interest rates are tipped to remain on hold for the seventh month in a row at today’s Reserve Bank board meeting.

The cash rate was last cut in August, taking it to the historic low of 2.5 per cent.

A survey of economists by Bloomberg shows all 32 expect the Reserve Bank to leave interest rates unchanged today.

Su-Lin Ong is the head of economics and fixed income strategy at RBC Capital Markets and says recent data depicts a fairly mixed domestic economy, affording the central bank some time to wait and see on monetary policy.

“A period of stability in interest rates remains the most likely and appropriate course of policy action, so it’s likely to be a pretty steady picture,” she said.

Ms Ong says, while parts of the economy are doing well, others are still lagging.

“Softer growth, a weaker labour market and weakness in capex (capital expenditure), yet we also have some signs of improvement in housing and firmer retail sales, with inflation a little higher than anticipated,” she observed.

“Weighing up all those conflicting factors suggests that really the most appropriate course of action is for the RBA to stay on hold.”

Ms Ong is one of many economists predicting rates to remain steady until 2015.