Australian Monetary Policy Rate Stays at Record Low 1.5%

May 2, 2017

The RBA’s Official Cash Rate has been at 1.5% since 25-basis point reductions in May and August of 2016. A pair of 25-basis point cuts each were also implemented in the final quarter of 2012, May and August 2013 and February and May of 2015. Governor Lowe’s statement explaining today’s action acknowledged that inflation has returned to 2.0% but said that had been expected. The bank hasn’t changed its macroeconomic forecast much, but officials continue to warn that a rise in the Aussie dollar would be problematic. The annual Australian budget due a week from today is expected to embody some stimulus. In any case, an interest rate change so soon before the budget would have been unlikely. Most likely, RBA officials will not be inclined to change gears even after budget details are known.

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

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