Rates on hold until May

According to National Australia Bank’s chief economist Alan Oster, the RBA would be hesitant to lift rates before mid-2011 thanks to a spate of weak economic data.

“We have revised our rate hike expectations. Originally, we expect the RBA to lift rates again in February, however, we now think it will more likely be May before the RBA acts,” Mr Oster said.

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“We expect the official cash rate to hit 5.25 per cent by August 2011.”

The last time the RBA lifted the official cash rate was in November, when all four of the majors decided to lift above and beyond the board’s stipulated 25 basis point increase.

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