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RBA tipped to ‘sit tight’ on rate today

RBA tipped to ‘sit tight’ on rate today

The Reserve Bank of Australia is likely to leave the official cash rate on hold today after last week’s inflation figures came in “slightly stronger” than expected, a mortgage comparison site has predicted.

A RateCity.com.au analysis of over 30 key economic indicators suggests that interest rates will remain unchanged today as the RBA “sits tight” while monitoring global economic movements, with consumer price data likely to be a “key discussion point”.

Peter Arnold, data insights director at RateCity.com.au commented: “The RBA will be inclined to keep official rates steady after Wednesday’s inflation figures saw consumer prices rise faster than expected, coming in at 1.3 per cent for the year to September and 0.7 per cent for the quarter.”

He explained that both measures mean that the inflation rate still sits below the RBA’s target of between 2 and 3 percent, which “in theory” could give the RBA impetus to move.

“But the board is likely to sit tight tomorrow given the already record-low interest rates and mounting global economic influences,” he said.

“The perfect storm is brewing with the US election on a knife edge, and Trump and Clinton within sight of the White House, which is expected to cause further volatility for our currency,” Mr Arnold added.

“The Aussie dollar lifted temporarily on the CPI data, but the RBA will be closely monitoring it following next week’s presidential vote.”

[Related: ‘Messy’ CPI result could stay RBA’s hand]

RBA tipped to ‘sit tight’ on rate today
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