by Which4u
An IMF official has suggested interest rates may need to rise to curb inflation.
The International Monetary Fund (IMF) has advised savings account holders that the Reserve Bank of Australia (RBA) may have little choice but to raise interest rates in order to keep inflation under control.
Speaking to the Australian this week, Ray Brooks, the head of the IMF's mission down under, warned that house prices are overvalued by between ten to 15 per cent - which could have a particularly strong impact on those seeking home loans.
However, he insisted that the recent weakness in consumer spending could have a positive long-term effect on household finances, giving families a chance to get their affairs in order and protecting them from the impact of economic uncertainty.
Mr Brooks explained that while the IMF had cut its Australian growth forecast for 2011 to two per cent, he remained upbeat that the recovery will gather enough pace to register expansion of between three and 3.5 per cent next year.
"It is the demand from China and the rest of Asia that is driving this very strong and favourable outlook for Australia," he commented. "If [remaining] risks turn out to be limited risks, in future I think there is likely to be a need for a further increase in the policy rate."
The IMF official also expressed support for the government's plan to use the revenues generated by the controversial carbon levy to raise the tax-free threshold for lower earners to $18,000, but insisted "more reform" would be necessary.
He also called on the Labor-led coalition to run bigger budget surpluses in the future, to guard the economy against any downturn in Chinese demand for commodities.
Last week, research group Nielsen revealed that its consumer confidence index declined by seven points during the second quarter, with shoppers citing particular fears about the rising cost of living.
An increase to interest rates would be welcomed by those that regularly make use of savings accounts, as they would be able to earn higher returns on their savings. The move would increase the competition in the savings market and allow providers to offer better deals through a range of products, from standard instant access savings accounts, to term deposits which come with restrictions to withdrawals in exchange for higher rates.
However, it would also have a negative affect on anyone that is currently making mortgage repayments, as the cost of borrowing would rise.
http://goarticles.com/article/IMF-issues-interest-rate-warning/5209199/
An IMF official has suggested interest rates may need to rise to curb inflation.
The International Monetary Fund (IMF) has advised savings account holders that the Reserve Bank of Australia (RBA) may have little choice but to raise interest rates in order to keep inflation under control.
Speaking to the Australian this week, Ray Brooks, the head of the IMF's mission down under, warned that house prices are overvalued by between ten to 15 per cent - which could have a particularly strong impact on those seeking home loans.
However, he insisted that the recent weakness in consumer spending could have a positive long-term effect on household finances, giving families a chance to get their affairs in order and protecting them from the impact of economic uncertainty.
Mr Brooks explained that while the IMF had cut its Australian growth forecast for 2011 to two per cent, he remained upbeat that the recovery will gather enough pace to register expansion of between three and 3.5 per cent next year.
"It is the demand from China and the rest of Asia that is driving this very strong and favourable outlook for Australia," he commented. "If [remaining] risks turn out to be limited risks, in future I think there is likely to be a need for a further increase in the policy rate."
The IMF official also expressed support for the government's plan to use the revenues generated by the controversial carbon levy to raise the tax-free threshold for lower earners to $18,000, but insisted "more reform" would be necessary.
He also called on the Labor-led coalition to run bigger budget surpluses in the future, to guard the economy against any downturn in Chinese demand for commodities.
Last week, research group Nielsen revealed that its consumer confidence index declined by seven points during the second quarter, with shoppers citing particular fears about the rising cost of living.
An increase to interest rates would be welcomed by those that regularly make use of savings accounts, as they would be able to earn higher returns on their savings. The move would increase the competition in the savings market and allow providers to offer better deals through a range of products, from standard instant access savings accounts, to term deposits which come with restrictions to withdrawals in exchange for higher rates.
However, it would also have a negative affect on anyone that is currently making mortgage repayments, as the cost of borrowing would rise.
http://goarticles.com/article/IMF-issues-interest-rate-warning/5209199/
No comments:
Post a Comment