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Stephen Koukoulas - Rates On Hold
BY STEPHEN KOUKOULAS - 01/05/2017 | VIEW MORE ARTICLES BY ALAN KOHLER

The monthly meeting of the RBA Board on Tuesday is almost certain to leave official interest rates on hold at 1.5 per cent, a rate first reached in August 2016.

The pressure is roughly evenly divided about the direction of the next move with a slight bias in market pricing towards a cut. Rising unemployment and confirmation that underlying inflation is well contained are suggesting lower official interest rates: improving global economic conditions and still buoyant house prices in Sydney and Melbourne are suggesting higher interest rates.

While there is such a push and pull on the key economic data, the best decision for the RBA Board is “rates on hold” even though the market is pricing in a slight (15 per cent) chance on an interest rate cut before year end, and for the risk of interest rate rises during 2018. Perhaps the best bet is rates on hold for a year or more.



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The Constant Investor is the new home of Alan Kohler, founder of Eureka Report and the ABC's finance presenter. Join to receive - Kohler's Weekly Overview, exclusive stock tips, investment ideas, podcasts and much more. Click here to learn more.



 

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