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Interest rate anxiety

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by Peter Switzer

Well, the Reserve Bank had a great day at the office on Tuesday, wisely deciding to kick its habit of raising interest rates.

Behind the smart decision was the hard-to-ignore slowing Aussie economy and some of the worrying economic signs in the US and the debt dramas in Europe.

However, if the Oz economy gives the RBA a reason to worry that inflation might get away from them they could easily raise rates in July. And that's why today’s job numbers are important.

If employment rises by 25,000 then economists will start speculating about rate rises next month and the media will go along for the ride.

ANZ thinks there will be only 14,000 jobs but even with that result unemployment would remain at 4.9 per cent.

Of course, if jobs fall like they did in April, we could get the Reserve Bank off our back for the rest of the year.

Interest rate anxiety has become like rust – it never sleeps!

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Thursday, June 09, 2011

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