by Alan Thornhill
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.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Friday December 13
The Dow Jones index falls 105 points to 15,739.
The $A drops to US 89.39US cents shortly after 8am, Sydney time
The Senate rises for the year, without passing government bills to abolish the carbon tax
Car industry workers’ plight to be high on the agenda, when the Prime Minister meets State premiers today
Australia’s unemployment rate rises slightly to 5.8 per cent in November 2013 (seasonally adjusted):ABS
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