Australian Official Cash Rate Left Unchanged at 1.50%

March 7, 2017

The Reserve Bank of Australia’s Board retained a record low 1.50% official cash rate at this month’s policy meeting. A released statement is pretty upbeat, observing an improved global economy, quite low inflation with subdued wages, regionally mixed housing market conditions, and higher world commodity prices that are lifting Australian incomes. A gradual rise of inflation to back above 2.0% but with steadier core inflation is projected. The main enumerated downside potential risk factor continues to be the possibility of an appreciating trend in the Aussie dollar, which thus far has not materialized. If that were to happen, Australia’s ongoing structural adjustment away from reliance on investment in the resource sector would be “complicated.”

There were two 25-basis point OCR reductions in both 2015 and 2016, most recently occurring last August.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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