Reserve Bank of Australia Keeps 2.5% Official Cash Rate Level

October 7, 2014

The statement released after this month’s RBA Board meeting repeats many points from prior statements.  Growth is expected to be a little below trend for the next several quarters.  Modest wage pressure “should keep inflation consistent with the 2-3% target even with lower levels of the exchange rate.”  Monetary policy remains accommodative.  Credit growth is moderate overall but has picked up in the housing sector.  Since the Aussie dollar has fallen recently, the protest against its current level is justified by its excess versus “historical standards” rather than analyst notions of its “fundamental value.”  No change in the OCR is in the offing.  Between November 2011 and August 2013, the OCR was reduced from 4.75% to 2.5%.

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



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