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Interest rates remain on hold

by Marquette Turner

in News & Views

Even though the Reserve Bank this week kept interest rates on hold, it still faces a tricky balancing act in bringing inflation back to its 2-3 per cent target band as it risks pressing too hard on the rate brakes and driving the economy into recession.House prices grew at their slowest quarterly pace in a year during the March quarter – one sign that interest rates are having their desired impact.

And the number of job advertisements published last month jumped after a slow start to the year, in a sign that while the economy may be slowing, there is still plenty of strength in demand.

A senior strategist with TD Securities, Joshua Williamson, said a broad array of goods and services were contributing to inflation, not just higher petrol and food prices.

The Bureau of Statistics’ house price index rose just 1.1 per cent in the first three months of this year, compared with a 4.1 per cent increase in the December quarter.

Sydney posted the sharpest decline, with average prices falling 1.5 per cent, followed by Darwin and Hobart, with falls of 1.3 and 0.7 per cent, respectively.

Property markets in Brisbane and Melbourne remained buoyant, with prices rising by 2.8 and 4.1 per cent respectively.

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