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Staff Reporter
The Reserve Bank is currently doing a very good job of managing the Australian economy, according to HSBC.
HSBC chief economist Paul Bloxham said the recent spate of soft economic data suggests the RBA is achieving what it has long set out to do – slow growth in interest rate sensitive parts of the economy to make way for the mining investment boom.
Retail sales rose only modestly in November, reflecting the impact of monetary policy.
It also reflects that households have been spending in other ways. With a strong Aussie dollar, greater confidence in the internet and better priced goods available from elsewhere in the world, Australian households have seemingly been buying more goods from sources outside the retail survey.
With all this data in mind, Mr Bloxham said the Reserve Bank will be looking to hold the official cash rate steady at 4.75 per cent until at least the second quarter of 2011.
"It is around this time that the labour market should tighten up and incomes will be boosted by the high level of commodity prices, forcing the Reserve Bank to raise rates further to constrain household spending,” he said.
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