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The man who sets our interest rates has good news for summer: we can relax. Interest rates are not going up again ahead of Christmas and probably not until well into the new year.
The plain message, delivered three times during his three-hour grilling by the Parliament's economics committee, appears designed to reassure shoppers, borrowers and retailers put on edge by the outsized mortgage rate increases imposed by the big four banks on top of his Melbourne Cup day lift in the cash rate of 25 basis points.
Bank margins had fattened in the last two years but were still much better than ''10 or 15 years ago''. There would probably be some more rate rises ''next year and maybe a little bit more after that'' but it was ''unlikely there will be anything from us imminently - I think that is probably a reasonable expectation of people just now''.
The Australian dollar slumped US1¢ on the governor's words to US97.16¢ as futures traders wound back their expectations of future interest rate rises, cutting the implied probability of a rate rise before May from 74 per cent to 42 per cent.
Article thanks to www.domain.com.au
