While there have been domestic improvements in both retail and employment numbers, interest rates will remain steady for the month of August, with the RBA maintaining the current rate of 2.50%.
Analysts are predicting the rate will hold steady for 18 months in total from the time of its previous change, a quarter percentage point cut, in August 2013. They say that the next change, predicted to be a rate hike, is unlikely to happen until early 2015.
Although the official July jobless rate isn’t due out until Thursday, many economists are tipping the economy to have added 20,000 jobs in the last month alone.
News in the retail sector is also positive, with Monday’s announcement highlighting a stronger than expected 0.6 per cent rise in retail sales for the month of June.
Business confidence rising on steady interest rates
HSBC Australia chief economist Paul Bloxham believes both consumer and business confidence has taken a positive turn in the last few weeks.
“Consumer sentiment has bounced back strongly in recent weeks, and business sentiment, which was largely unaffected by the budget, remains at levels consistent with rising domestic demand,” he says.
Global monetary policy, particularly in the US still hangs over the local market, but ANZ senior economist Justin Fabo says we are likely to see interest rates rise here before the US does.
“Markets are pricing the first increase in US rates around – August next year but we expect it before then,” he predicts.
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