Reserve Bank of Australia

November 4, 2014

The Official Cash Rate has been 2.5% since August 2013 and will continue at that level.  Two 25-basis point cuts administered in May and August of that year followed reductions totaling 125 bps in 2012 and 50 bps in 2011.  The current stance is “accommodative” yet “appropriate,” according to the RBA Board in light of moderate growth “a little below trend,” in-target inflation, modest wage growth, and an exchange rate that though at lower levels recently still “remains above most estimates of its fundamental value.”  Today’s statement is mostly a replication of the prior meeting’s statement.  A notable change was the dropped reference to the Aussie dollar being high “by historical standards,” but the note leaves no doubt that officials hope to see and expect more depreciation.  The policy message therefore remains the same.

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



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