RBA boss puts Dec rate rise off the agenda

It seems borrowers will be spared another interest rate rise this year, but even
Glenn Stevens admits he does not know what interest rates will do next year.
In testimony to a parliamentary committee on Friday, the Reserve Bank of Australia
(RBA) governor indicated interest rates were just where the central bank wanted
them.
The latest official rise in the cash rate and subsequent bigger increases in bank
lending rates had left monetary policy "a little tighter than average, as judged by
the interest rate criteria", he said.
As well, access to credit had been tightened, especially for businesses.
"Overall, and also taking account of the exchange rate, which has risen
substantially this year, we judge this to be the appropriate setting of policy for
the period ahead."
In the subsequent discussion, Mr Stevens made it clear that "the period ahead"
extended beyond the next RBA policy meeting on December 7.
And more than once he pointedly declined to contradict expectations built into
financial market pricing.
Mr Stevens looked to his assistant governor for financial markets, Guy Debelle, for
the latest on where the money market saw the outlook for the cash rate.
"The market pricing has the cash rate rising to five per cent by the middle of next
year and rising, maybe, a little bit beyond that, but not a lot," Dr Debelle said.
The governor acknowledged some economists expected cash to hit 5.5 per cent next year.
"Some economists have it going up that much, some don't.
"And you know I'm not sure myself, really, to be frank, in a year's time where we're
going to be.
"You can't be" he said.
At some point there may be a need for some further monetary restraint.
"But at this stage the expectations are for only fairly gradual and not very close
together increases and I certainly don't want to come here today to steer people
away from that.
"At this point in time, I don't think there would be enough information on which to
do that," he said.
Later in his testimony, Mr Stevens returned to a discussion of the market pricing
the likely path of the cash rate, "probably be some more (interest rate increase) in
the middle of next year and maybe a little bit more after that".
And he said that was not an unreasonable view.
"If you buy the central scenario that we've sketched out - one way or another
something will happen to take us off course but that's the central view - it's not
unreasonable for people to think that," he said.



------------------------------------------------------------------------------
This email is intended for the use of the addressee only. If you receive this email
in error, please delete it immediately. This email may contain information which is
confidential and/or legally privileged. You must not use or disclose the contents of
this email, or add the sender's email address to any database, list or mailing list
unless you are expressly authorised to do so. The statements or views expressed in
this email are those of the individual sender and are not those of Australian
Associated Press Pty Ltd (AAP). These statements are not binding on AAP, except
where the sender expressly and with authority, states them to be. AAP is unable to
review the contents of all the email on its system. To the extent permitted by law,
AAP disclaims all liability for any loss or damage caused by the contents of this
email. www.aap.com.au