Interest rates could fall next year: says NAB
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October 28, 2007 - 11:28AM
Volatility in the United States financial markets could lead to a drop in interest rates in Australia next year, National Australia Bank chairman Michael Chaney said today.
Mr Chaney was responding to a question on whether Australia was at the start of a cycle that would see interest rates and inflation creeping higher.
"It's impossible to know that actually," he told Sky News.
"There are obviously some inflationary signs in the economy but at the same time you've got the US really suffering in its housing market, and threatened with recession and having to lower interest rates.
"That ought to have an effect here eventually.
"You might find that the troubles in the US at the moment flow through and cause activity in Australia to be lower.
"You could find that interest rates fall next year."
The Reserve Bank is widely tipped to increase rates again next month.
Mr Chaney would not be drawn on the likely effect on interest rates depending on which party wins the November 24 election.
"One point we've been making very strongly is that whichever party is in power after the election has to make sure that productivity is not affected negatively by the workplace relations legislation," he said.
"It's really important that we have enterprise-based workplace relations arrangements."