The official cash rate is likely to stay on hold for at a few months at least.
According to AMP’s chief economist Shane Oliver, the Reserve Bank of Australia is very happy with its current monetary policy setting and would not be looking to change it any time soon.
The minutes of the RBA’s December policy meeting suggests the Board still sees the high terms of trade boosting investment and eventually inflation.
That said the Board also sees monetary policy as now being mildly restrictive. As such, there is no longer a burning need to lift rates quickly in order to curb rising inflation fears.
“With restraint in household consumption and borrowing making room for investment to rise, the clear impression remains that interest rates are likely to remain on hold for several months at least,” Mr Oliver said.
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