Reserve Bank of Australia Retains 2.5% Official Cash Rate as Expected

May 6, 2014

The statement released after the RBA Board’s May monthly policy meeting reads very similarly to April’s statement.  Officials call the current stance appropriate for balancing the goals of “sustainable growth in demand and inflation outcomes consistent with the target” of 2-3% and predict that policy will hold steady for a period of time.  The stance has no directional bias.  The view is reiterated that the Aussie dollar is still “high by historical standards.”  Even if the A-dollar falls further as officials hope, in-target (2-3%) inflation is expected especially given a noticeable decline in the “growth in wages.”  The Official Cash Rate has been at a record low of 2.5% since a 25-basis point cut in August 2013 that capped a 8-step, 225-basis point series of reductions begun in November 2011.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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