Australians with mortgages can breathe a bit easier after the
Reserve Bank of Australia yesterday held its cash rate at
2.5% while noting inflation remains consistent with its
target of between 2% and 3%.
In New Zealand, the Reserve Bank is expected to lift its
official cash rate to 3.25% on June 12, adding pressure to
those with mortgages.
Exporters could again suffer, as the dollar is likely to rise
in value as overseas investors seek higher returns by
investing in New Zealand's financial markets.
New Zealand's inflation is 1.5%, still below the mid-point of
the 1% to 3% target range.
The European Central Bank seems set to produce negative
interest rates on Thursday night, meaning depositors will get
zero percent for any money they have in the bank.
RBA governor Glenn Stevens said Australian monetary policy
remained accommodative. Interest rates were ''very low'' and
for some borrowers had edged lower over recent months.
Savers continued to look for higher returns in response to
low rates on safe instruments. Credit growth had increased
slightly, he said.
''Dwelling prices have increased significantly over the past
year though there have been some signs of a moderation in the
pace ... recently.''
The earlier fall in the exchange rate was assisting in
achieving balanced growth in the economy but less so than
previously as a result of the higher levels over the past few
The exchange rate remained high by historical standards,
particularly given the further decline in commodity prices,
Mr Stevens said.
''On present indications, the most prudent course is likely
to be a period of stability in interest rates.''