Reserve Bank of Australia

April 5, 2016

Australia’s official cash rate was left at the record low of 2.0% that has prevailed since a 25-basis point cut in May 2015, which followed a similar reduction enacted three months earlier.  Previously, the OCR was reduced in eight steps from 4.75% to 2.5% between November 2011 and August 2013.  A statement released after this months policy board meeting is most notable for a more emphatic observation of concern regarding recent strength in the Australian dollar:

The Australian dollar has appreciated somewhat recently. In part, this reflects some increase in commodity prices, but monetary developments elsewhere in the world have also played a role. Under present circumstances, an appreciating exchange rate could complicate the adjustment under way in the economy.

The statement projects continuing subdued inflation and asserts that a further rate cut is possible if a need to buttress demand arises: “the Board to assess the outlook for inflation and whether the improvement in labour market conditions evident last year is continuing. Continued low inflation would provide scope for easier policy, should that be appropriate to lend support to demand.”

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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