Rates freeze expected by NAB

National Australia Bank (NAB) and Economist believes that interest will stay on hold because Reserve Bank has kept the cash rate at 4.75%. They believe it will stay for another 14 months where the cash rate will freeze which has already been on hold for 10 moths. NAB also anticipates a long period of inaction by the RBA, before increasing rates to 5% in November 2012.

According to NAB Chief Economist Alan Oster, JP Morgan economist Stephen Walters and TD Securities strategist Roland Randall, they believes the Reserve Bank, content that inflationary pressures are now under control, will stay on the sidelines for another 14 months. They are tipping the cash rate will stay on hold for more than a year. The central bank is under pressure from retailers and the property sector which holds it next interest rate. NAB were previously forecast a rate rise in next May, is still tipping an increase of 25 basis points. NAB said that they expected core inflation to remain between 2.5% and 2.75% within the RBA’s target range of 2%-3% until 2013.

According to NAB Chief Economist Alan Oster, “While there remain some downside risks to the near-term inflation outlook, reflecting both global and domestic factors, we still anticipate that inflation will rise above the target band in mid-2013 as the labor market tightens and underlying growth in the economy strengthens.” Westpac is the only major bank leaning the next move for interest rate will be down and hoping and looking forward to the future market will continue to rate cut of this coming Christmas.