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RBA leaves interest rates unchanged for July

The Reserve Bank of Australia has left the official cash rate for July unchanged from a record low level of 2.50 per cent, in line with the expectations of the economists surveyed.

However, as the financial year draws to a close, borrowers are being asked to get ready for several rate rises soon. AMP and Commonwealth are among the banks forecasting a rise as soon as October this year.

The mix of data and the rise in the dollar in the past couple of months has seen many economists push out their forecast for a rate rise until next year.

Goldman Sachs believes the Reserve Bank will cut rates again in September.

The Australian dollar bounced as the greenback continued to be weighed down by weak economic data.

Earlier on Tuesday, the local currency was trading at 94.32 US cents, up from 94.02 cents on Monday.

The Australian dollar has been on a high since disappointing US economic growth and consumer spending data put pressure on the greenback last week.

Data overnight showed that US pending home sales had surged in May but were down 5.2 per cent compared with a year ago.

Though positive, the overnight figures did not support the US dollar, said National Australia Bank senior economist David de Garis.

“The market was looking to sell the US dollar and they did,” Mr de Garis said.

“The Australian dollar had softened earlier in the night, but US dollar weakness saw it rebound from under 94 US cents to around 94.30 this morning.”


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