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The Reserve Bank of Australia (RBA) left interest rates on hold at 3 percent as predicted.                                                 reserve_bank_400

A  survey by AAP had expected the RBA to leave the cash rate at the lowest since 1960.

Treasurer Wayne Swan said last weekend that it was obvious that rates will rise, while Minister for Financial Services, Chris Bowen, warned yesterday that rates can’t stay low forever.

Some economists believe the first rate rise could come this year, but the general view is that rates will remain on hold until the middle of next year.

In a statement released after the announcement, governor Glenn Stevens said the risk of “severe contraction” in the Australian economy had abated.

“Economic conditions in Australia have been stronger than expected a few months ago, with both consumer spending and exports notable for their resilience,” the statement says.

“Measures of confidence have recovered a good deal of ground.”

The statement adds: “The board’s judgment is that the present accommodative setting of monetary policy is appropriate given the economy’s circumstances.

“The board will continue to monitor how economic and financial conditions unfold and how they impinge on prospects for sustainable growth in economic activity and achieving the inflation target.”

 

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The Reserve Bank of Australia (RBA)  is due to announce its decision on interest rates at 2.30pm (AEST) on Tuesday.
The economists surveyed by AAP said the cash rate will remain at a 49 year low of three per cent after the central bank’s board meeting on August 4.

“The RBA appears to have no intention of reducing the cash rate any further,” said Matt Robinson, an economist with Moody’s Economy.com. reserve_bank_400

“I think a housing market bubble is starting to form, and given the sentiment that governor Stevens expressed in his speech to the Australian Business Economists, that is something that the RBA is watching and that would be a reason for them to maybe hike interest rates earlier.”

There were doubts about whether the RBA would be deterred from raising rates if unemployment continued to rise.

The RBA has kept the cash rate at 3 per cent for three consecutive months.

Michael Turner, an economist with financial markets research group 4Cast, said the prospect of rising unemployment would mean the cental bank could keep rates steady until well into 2010.

“We’re still of the opinion the worse is yet to come and things look better now than they did a couple of months ago, which is why we’re now calling it on hold (in August) rather than going lower,” he said.

“But we still think there’s enough of a story in the lack of utilisation in the economy at the moment that price pressure might be moderate enough at 3 per cent.

“We’re currently chewing on a rate rise in 2010 at the moment. It’s possible, but not until late 2010.”

If you look at the split in the market or the way the debate was being conducted it was very much the idea that the RBA isn’t going to hike because they never have while the jobless rate has been rising.

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Firemen will work through the night to clear petrol from the scene of a massive explosion at a petrol station in the Perth suburb of Maddington.

A petrol tanker exploded at the Caltex station, starting a fire that destroyed parts of the vehicle, the roof of the forecourt and the shop front.article-fire-pic-420x0

A Fire and Emergency Services Authority spokesman told AAP the fire was brought quickly under control by firefighters.

“The focus is now on making the scene safe, which is a very important task,” the spokesman said.

“There was a fair bit of damage to the majority of the building.”

Petrol still left in the 40,000-litre tanker will be drained into another tanker, while specialists work to recover any water that may have been contaminated by the unleaded petrol.

About a quarter of the petrol in the tanker burnt in the fire.

Homes and businesses, including a suburban shopping centre, within a 500-metre radius of the station have been evacuated.

Residents will not be allowed to return until authorities are confident the area is safe and there is no petrol left to ignite.

That is likely to be sometime late on Friday night, the spokesman said.

No one was injured in the incident.

“It is great news. Fire authorities were called very quickly, and they got to the scene in a good time, meaning there were no injuries.

“There were people on the forecourt, in the shop, and of course the tanker driver,” the spokesman said.

The truck will not be removed until Saturday, while the investigation into why the fire started will continue for a few days.

www.news.ninemsn.com.au article

www.watoday.com.au Ben White photo

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