Australia 'now set for rate hike'

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    Australia 'now set for rate hike'


    Australia is set for an interest rate rise this week, with one economist arguing the case for a hike was at its most compelling in a decade.

    The Reserve Bank of Australia (RBA) meets on Tuesday and is expected to lift rates for the first time in almost two years, with any change to be announced at 0930 AEST on Wednesday.

    Economists anticipate the central bank will lift the cash rate by 25 basis points, from 4.25 per cent currently.

    HSBC chief economist John Edwards said if the RBA had any lingering doubts about a May rate hike, all it need do was look at the numbers.

    "With every indication of strong output growth and high inflation, and with the overnight rate still set at a thirty year low, the case for a rate rise is clearer and more compelling today than it has been for more than a decade," Mr Edwards said.


    Monday's ANZ job advertisement data is the latest in a string of strong economic data, reinforcing the case for a rate hike this week.

    ANZ chief economist Saul Eslake said the record 26.3 per cent increase in job ads in April was a strong pointer to a rate increase on Wednesday.

    Westpac chief economist Nigel Stapledon said the fact that unemployment was starting to fall was a critical point for the RBA in its rates determination.

    "If unemployment was hanging up at seven per cent or higher then we wouldn't be talking about a rate rise for Wednesday," he said.

    Mr Stapledon said strong employment data released to date meant a rate hike from the RBA was highly probable.

    "It would be a shock to the market if they didn't, and the Reserve Bank does not like to shock the market."

    The latest unemployment numbers will not be released until Thursday, with the April labour force figures expected to show another fall in the unemployment rate.

    Mr Edwards said although the circumstances justified it, the RBA was not likely to lift rates by more than 25 basis points this week.

    "At 4.25 per cent the overnight rate is so low that a 25 basis point increase is anyway a sufficiently spirited beginning," he said.

    Mr Eslake said while a rate hike was likely, one consideration against the move was that the US Federal Reserve was not likely to move on rates in the near term.

    "This would be the first monetary policy cycle for more than a decade in which the Reserve Bank led rather than followed the Federal Reserve," Mr Eslake noted.

    "It is a consideration that the US recovery, which seemed quite strong in the March quarter, seems to be losing a bit of steam."

    Yes Boys bring it on let’s just test that theory.
    I love Fabian economics create wealth so you can destroy it but it’s hardly any thing new you have been practicing it for years.
    I wonder if the superior intellect can conceptualize the results of its policy over several decades.
    Is the general Australian community better or worse off.
    That is the judgement that needs to be made and not just based on handouts.

    Oh I love it when fools come together

    Gyro

    Maybe i should rest now LOL
 
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