Australian Interest Rate Meeting Review

April 5, 2011

Australia’s Official Cash Rate will remain at 4.75% for at least another month.  This decision by the RBA Board was expected.  The key interest rate had previously been raised seven times, each by 25 basis points, between October 2009 and November 2010.  A statement from the Reserve Bank of Australia released after today’s meeting reiterated that the current policy stance is “mildly restrictive,” “appropriate” and likely to keep CPI inflation in its 2-3% target band.  The elevated Aussie dollar, prior low growth in wages, and competitive forces were identified as disinflationary forces.  The statement called overgrowth “subdued” and observed cautious consumer spending and borrowing.  Slower but positive employment growth is expected, notwithstanding the drop of jobs in February, the first time that has happened since August 2009.  The statement explicitly predicts a “limited” drag on growth in the broader Asian region from Japan’s natural disaster.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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