Published on January 24th, 2013
HIA calls for further rate cuts
The Housing Industry Association (HIA) has called for a cut in interest rates, given that inflation has been kept at the "lower end of the target range".
The Consumer Price Index (CPI) saw an increase by half a per cent in the December quarter, which means that there was a 2.2 per cent rise for the whole of 2012.
Economist with the HIA, Geordan Murray, said that the Reserve Bank of Australia should look at adjusting the cash rate.
He commented: "Relatively low inflation late in 2012 suggests the rate cuts in mid-2012 have not triggered any material uplift in inflation in the second half of 2012.
"This is testament to the change in household attitudes and consistent with more conservative approach to spending. It seems saving is increasingly preferable to consumption."
He added that there have been concerns that non mining and resources sectors have not been able to make significant contributions economic growth. And given that that a budget surplus has been abandoned by the federal government, it gives Labor the opportunity to create a climate of growth.
The Australian reports that those looking for cuts may be disappointed, with economists predicting that the RBA will keep rates at their current level of three per cent.
Chief economist with HSBC, Paul Bloxham, said that there are a number of factors that would mitigate any rise, such as moderately increasing prices in real estate and more growth in the Chinese economy.
He added that the disappointing information is from last year and that 2013 appears to be a lot more prosperous.
Head of Australian economics with the ANZ bank, Justin Fabo, said that he believes the mood has gotten better but does believe that by the end of the year, rates will be as low as two per cent.