RBA stays the course

As expected, the Reserve Bank of Australia decided to keep interest rates on hold today.

While the official rate remains unchanged, we're watching closely what the banks do with their rates as some of Australia's biggest lenders have recently made changes to their rates regardless of official interest rate moves by the RBA. If in doubt about your home or business loan arrangements, you should call us.

From an investment perspective, this leaves 6-12 month Term Deposit rates in the area of 4%, providing a low risk-free return (still high by global standards) alternative to other assets such as shares and property.

Going forward, the RBA really wants to see what the real impact of the tapering down of 'quantitative easing' in the US will translate into. If the RBA sees evidence of a slowing down of our economy, particularly in the retail sector, you should expect to see further easing. Our falling currency will also have an impact on the future direction of interest rates. We'll keep you posted. Rick Maggi.