No Interest Rate Change from the Reserve Bank of Australia but New Language about the Australian Dollar
August 1, 2017
The latest monthly RBA meeting kept the Official Cash Rate at 1.5%, a record low since a 25-basis point cut a year earlier. A released statement kept the bank’s macroeconomic forecasts largely unchanged, but new language was introduced in the comment on the Australian dollar:
The Australian dollar has appreciated recently, partly reflecting a lower US dollar. The higher exchange rate is expected to contribute to subdued price pressures in the economy. It is also weighing on the outlook for output and employment. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.
This replaced a previous repeated and oft-repeated passage that as recently as the July 4th meeting read, “The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment.”
Economic growth in Australia is projected to hover around 3% per annum, and both total and core CPI inflation are presently slightly under 2%. Housing market conditions in the country vary by locality.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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