As widely expected the Reserve Bank (RBA) held rates the same for the month of August.
In the statement accompanying today’s decision, the RBA has stated that growth is likely to be “close to trend”, inflation is set to remain “close to target” and interest rates are “around their average levels”. It looks like the current pause is set to continue in the near term.
Longer term however, we believe rates are yet to peak in this cycle.
We have seen extensive discounting in household appliances, insurance services, audio visual and computing equipment, holiday travel and accomodation as well as clothing. A return to more normal trading conditions could see this discounting quickly reverse and faster price growth as a result.
If this results, the RBA will have no choice but to increase interest rates to keep inflation within its target range. Therefore, the case for higher rates over the long haul is still there.
Hey, Alfred here – Did you enjoy my latest article? Do you have any questions or Feedback for me? Call me on (02) 9266 2269 or Book an Appointment online.
Remember that our first meeting is cost and obligation free.
