RATES LEFT ON HOLD – BUT FOR HOW LONG?

07/06/2011 6:05 am

The RBA has decided at its meeting today, to keep the pause button on the cash rate at 4.75%.

Most commentators and economists expected the RBA's decision to keep rates on hold, given the recent discouraging data on the national economy.

This month's accompanying statement by RBA governor Glen Stevens was largely similar to last month's

Uncertainty over the prospects for resolution of the banking and sovereign debt problems in Europe has increased over the past couple of months, which has been adding to financial market volatility.

For those who are of the view that a rise is now certain for July. It is interesting to note that there was nothing in the text of the statement to suggest a rate rise was likely. There was also the emission of the May warning that

inflation can be expected to increase somewhat if economic conditions evolve broadly as expected.