Interest Rates — On hold till late 2007?

In a speech last week, Glenn Stevens (RBA governor) said he “saw no reason to revise its forecast for underlying inflation to settle at around 2.5 per cent in the second half of the year …”

As such, his message is that interest rates are likely to remain unchanged. But not everyone seems to share that view.

inflation.jpgEconomists generally feel that the release of the June-quarter CPI figures may show a different picture — based upon rising petrol prices, more expensive fruit and vegetable prices (due to the drought), plus the rise in residential rentals.

Therefore, you should expect to see a pre-emptive move by the RBA at its July meeting — to head off any inflationary pressure, moving into 2008. And, if you are about to finance a purchase, make sure you do so with a fixed-rate mortgage.

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