Reserve Bank of Australia: No Change
February 7, 2017
The central bank Board holds eleven policy meetings each year, skipping only January, which is mid-summer down under. So after a two-month break, officials made the same decision that had been reached at the four final reviews in 2016 by leaving the Official Cash Rate unchanged at a record low of 1.50%. There were two 25-basis point cuts last year in May and then August, which followed similarly-sized cuts in February and May 2015, May and August 2013, and October and December 2012.
A released statement projects 3% growth over the next couple of years. Total inflation is still “quite low” but forecast to move above 2.0% later in 2017. Core inflation will stay a little lower as labor costs have been subdued. The economy continues to transition progressively away from a mining investment boom, and this statement like earlier ones voices concern that sustained appreciation of the Aussie dollar is to be avoided because such would complicate the economic adjustment process. Depreciation since 2013 has been a necessary factor for the transition’s progress thus far.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.