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Encouraging business conditions to curb rate falls

by Staff Reporter8 minute read
The Adviser

The RBA is unlikely to move on interest rates any time soon and the bottom of its interest rate cycle could be higher than expected, NAB has revealed.

Business conditions improved significantly in April, NAB said yesterday, with its monthly business survey revealing a 7 point improvement and a stabilisation of its confidence index.

“There is little doubt that the results of the April survey represent the most encouraging set of numbers for some time,” NAB chief economist Alan Oster commented.

While NAB conceded Australia faced a challenging 2009 it said the RBA had delivered the bulk of its emergency cuts and revised its bottom cash rate forecast up from 2 to 2.5 per cent.

“We now see the RBA in data watching mode,” Mr Oster said.

“The RBA now requires bad, and possibly worse than expected, data to move lower.”

As to the timing Mr Oster said the bank expected the RBA to remain on hold “for some time” while rates would start to rise towards the end of 2010.


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