No Change Made This Month in Australian Official Cash Rate

September 5, 2011

Australian monetary policy was left unchanged as expected, and a more dovish statement was released than after the August Policy Board meeting.  The statement leads off with a discussion of “very unsettled” global financial conditions and reduced growth expectations in the advanced economies.  For Australia, too, “the near-term growth outlook continues to look somewhat weaker than was expected a few months ago. Beyond the near term, growth is still likely to be at trend or higher, unless the world economic outlook continues to deteriorate.” 

Officials have a medium-term core inflation target of 2-3%, which should be attainable in the near term.  “The Board remains concerned about the medium-term outlook for inflation. A key question will be the extent to which softer global and domestic growth will work, in due course, to contain inflation.” 

From October 2009 to November 2011, officials implemented seven cash rate increases, all by 25 basis points.  The rate now stands at 4.75%.

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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