Reserve Bank of Australia: No Rate Cut Now But Not Ruling Out Future Reduction
April 7, 2015
Australia’s Official Cash Rate of 2.25% since a 25-basis point reduction in February constitutes a record low. As in March, RBA Board members found the current stance “appropriate” for now. February’s cut was the first since ones of similar size in May and August 2013. Cuts totaling 175 bps were also implemented earlier in November and December 2011 and in May, June, October and December 2012. Today’s statement from officials makes many of the same points as the March meeting’s assessment. Domestic demand is “quite weak,” inflation should remain in target over the coming two years even if the Aussie dollar depreciates, which officials believe it will and should do. Spare productive capacity will persist for “some time yet.” Credit is expanding moderately. The statement concludes, leaving no doubt that the bias of policy is toward further ease.
At today’s meeting the Board judged that it was appropriate to hold interest rates steady for the time being. Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target.
Copyright 2015, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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