Australian Official Cash Rate Left at Record Low of 2.0%

October 6, 2015

After the expected decision not to change monetary policy, the Reserve Bank of Australia Board published a statement making similar points to the prior monthly meeting release.  The current stance is appropriately accommodative.  Growth is positive, but the GDP level will stay below full employment conditions for some time yet.  In-target inflation is likely over the forecast horizon even at a weaker exchange rate level.  The statement does not say that the currency must fall, only that it has been adjusting “to the significant declines in key commodity prices.”  There were two 25-basis point interest rate cuts earlier this year in February and May.  Five other 25-bp reductions before that were implemented in June, October, and December 2012 and May and August 2013.  An initial 50-basis point cut launched that easing cycle in May 2012.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



Comments are closed.