Another rate rise likely today

Two factors make another rate rise today all but inevitable.

The first is that Australia’s underlying inflation rate – of 3.6 per cent – is already above the Reserve Bank’s target range.

The second is that the nation is now emerging from the slump that followed the global economic crisis.

As Chris Richardson, the director of Access Economics notes, this is not a comfortable place to be at the start of an upturn.

A  former Treasury official, himself, Richardson is well place to know how Australia’s “official family” thinks on these matters.

The Federal Treasury and the Reserve Bank are both members of that “family.”

And they have a habit of thinking alike, when assessing the current state of the economy.

However that kind of thinking is far from universal.

Employer organisations, for example, are warning that the Reserve Bank could stifle Australia’s still week recovery if it raises interest rates too quickly.

And home buyers aren’t eager to see Australia’s  interest rates rise too quickly from their recent record lows.

Accees warns, though, that despite three recent rate rises, the upward movement in rates still has further to go.

But it added a caution.

“That said, there is no great rush to raise rates,” Access said.

“In the next six months underlying inflation will head down, rather than up,”it added.

At 2.30pm today, we will all know if the Reserve Bank’s board agrees with that assessment.

Related stories:

1. Rate rise looms as inflation rises
2. Rate rise:a good bet?
3. Rate rises:why they are still imminent