Reserve Bank of Australia
October 3, 2017
The Official Cash Rate of the RBA was last reduced in August 2016, the second of two 25-basis point cuts that year. The OCR previously had been cut from a peak of 3.5% by 50 basis points in the final quarter of 2012, another 50 bps during 2013 and 50 bps in 2015, and the level is now 1.50%. These accommodating moves were meant to facilitate a rotation of Australian growth to other sources following the end of a mining sector investment boom. According to a statement released after this month’s review, that transformation continues to progress. Real GDP expanded 3.3% at an annualized pace between the first and second quarters of 2017 but by just 1.8% from a year earlier. CPI inflation, up 1.9% in the year through 2Q17, “remains low” but like on-year growth is expected to pick up. A rise of the Aussie dollar since midyear, however, is a concern. “An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.”
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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