Jeff Whalley | Herald Sun | October 5, 2011
Australia’s mortgage belt could be cashing in on an interest rate cut as early as Melbourne Cup Day.
Reserve Bank chief Glenn Stevens yesterday kept rates on hold for the 11th consecutive month – the longest freeze in five years – but hinted rates could be cut as early as next month if global upheavals started to hit the Australian economy.
The cash rate will now stay at 4.75 per cent until at least Melbourne Cup Day, when the bank meets again and must decide if fears of an overheating economy have eased.
Mr Stevens yesterday tipped he would be looking to inflation data at the end of October before making a decision.
“An improved inflation outlook would increase the scope for monetary policy to provide some support to demand, should that prove necessary,” he said.
The comments saw the Aussie dollar fall even further to a year low of US94.5 cents.
Mr Stevens said more evidence was needed before the full impact of European and US turbulence could be judged.
“The uncertainty and financial volatility have reduced confidence, which could result in more cautious behaviour by firms and households in major countries,” Mr Stevens said.
He reassured market watchers that the boom in China would continue – even if returns were expected to be down this year.
But Australian Retailers Association head Russell Zimmerman said the lack of a rate cut was a blow for the retail sector which was hoping for a bright Christmas.