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Keep up to date with all the latest interest rate movements, Reserve Bank of Australia (RBA) announcements, banking and home loan news, and more with the Rate Detective interest rates blog. Or if you would like to find the best home loan from a range of lenders you can use our home loans comparison tool.

Cash Rate Stays at 2.5 Per Cent in October

Oct. 08, 2014

Australia's cash rate remains unchanged at 2.5 percent, said Reserve Bank of Australia (RBA) Governor Glenn Stevens in a statement released earlier today.

Overall, the global economy posted continuous growth. Economic growth of China is seen to slow down in recent months, but remains in line with the policymaker's objectives, said Mr Stevens. Prices of commodities further declined, but the weakening property markets may pose a challenge in the coming months.

In general, the RBA sees growth to be "a little below trend" in the next few months, with markets showing low chances of posting any increase in interest rates as long-term rates and risk spreads have remained very low. Overall, figures suggest that Australia maintains its moderate economic growth.

Data show unusual changes in the labour market. While employment seems to improve this year, growth in wages significantly slowed down, and it will take a long time before a consistent decline in unemployment rate can be seen. The country's unemployment rate is at 6.1 per cent as of 11 September, which is slightly lower than the previous month's 6.4 per cent.

The strong US dollar has led to a decline in the exchange rate. However, it is high based on historical standards since prices of key commodities continue to decline.

In the next couple of years, inflation is predicted to remain steady at 2-3 per cent target. The accommodative monetary policy is expected to continue to "provide support to demand and help growth to strengthen over time." According to the Board, monetary policy is designed to promote sustainable growth in demand and inflation rate which are proved to be consistent with the target. With the current data, it is likely that interest rates will remain stable in the coming years.

 


RBA Maintains Cash Rate at 2.5 Per Cent in September

Sept. 03, 2014

In today’s monetary policy statement, Reserve Bank of Australia (RBA) Governor Glenn Stevens announced the Bank’s decision to leave the cash rate at 2.5 per cent.

The statement hardly differed from previous ones given by the Governor. For one, the Reserve Bank continues to expect the country’s growth to be “a little bit below trend over the year ahead” due to the decline in investments in the resources sector and the moderate growth expected from capital spending despite an improvement in investment intentions from other sectors. On a more positive note, Business Conditions in July rose to 8 from the previous 2 and Business Confidence went up to 11 from the previous 8, while Consumer Confidence in August went up by 3.8 per cent, which previously went up only by 1.9, and the Consumer Confidence Index during the same month went up to 98.5 from the previous 94.9. Mr Stevens said that these are suggestions that “moderate growth in the economy is occurring.”

Meanwhile in the labour market, the Governor noted the rise in unemployment. The country’s unemployment rate rose in July to 6.4 per cent from the previous 6.0 per cent. Full time employment grew by 14,500 and part time employment fell by 14,800 during the same period. He said, however, that “the labour market has a degree of spare capacity”, which meant that it may take some time “before unemployment declines consistently.” In addition, he said that “[g]rowth in wages has declined noticeably and is expected to remain relatively modest over the period ahead,” which should help maintain the Bank’s inflation target despite the lower levels of the exchange rate.

Mr Stevens also mentioned that the low interest rates has led to increased competition among lenders. Lenders have been aggressive as of late with a series of cuts in their interest rates despite the lack of cuts from the RBA since last year. Of note was the decision of the country’s three largest banks to cut their three-year fixed rates at under 5 per cent, in a bid to attract more customers. These banks were The Commonwealth Bank, National Australia Bank, and Westpac. The effect of these cuts is yet to be seen, as home loans in June has grown only by 0.2 per cent, while investment lending for homes during the same month fell by 0.3 per cent.

Most recently, businesses helped with the increase in credit growth, said Mr Stevens. He also added that “[t]he increase in dwelling prices continues. Most recent figures show that the country’s House Price Index for Q2 went up by 1.8 per cent over the previous quarter, and by 10.1 per cent over the past 12 months.

The dollar continues to be overpriced according to the Governor despite the decline in key commodity prices. He said that the dollar’s value offers “less assistance than would normally be expected in achieving balanced growth in the economy.”

Overall, the Reserve Bank sees that the current monetary policy “should provide support to demand and help growth strengthen over time.”


Cash Rate Remains at 2.5 Per Cent in August

Aug. 07, 2014

As expected, Reserve Bank of Australia (RBA) Governor Glenn Stevens said in a statement that the Bank would maintain rates at 2.5 per cent in August.

Mr Stevens painted a fairly positive picture of the Australian economy, while keeping everyone’s expectations as realistic as possible. The statement has been consistent with the previous statements he has given in the previous months, including the expansion in housing construction where he said “strong expansion” is now under way. While building permits fell by 5.0 per cent in June over the previous month, it has gone up by a whopping 16.0 per cent over the past 12 months.
    
There was also mention about the continued and significant decline in investments in the resources sector. The Governor said while that there are signs indicating a desire to invest in other sectors, “these plans remain tentative” as businesses prefer a wait and see approach before starting to invest heavily. Overall, however, Mr Stevens said that the RBA expects “a little below trend” growth in the near future.

As for unemployment, more time is expected before it “declines consistently” even if there are signs of improvement over the past several months. While inflation has recently been on the rise, Mr Stevens said that modest growth in wages would help temper its effect.

With the cost of dwelling prices, the Governor said that it has been “slower” compared to the previous year, although it still continues to rise.

The tone was firmer with regards to the exchange rate this time. Instead of merely indicating that it remains high by historical standards despite the declines in key commodity prices, Mr Stevens said that it is “offering less assistance than it might in achieving balanced growth in the economy.”


RBA Cash Rate Steady at 2.5 Per Cent in June

July 14, 2014

Australia’s cash rate remain unchanged at 2.5 per cent, according to Reserve Bank of Australia (RBA) Governor Glenn Stevens’ statement earlier today.

Overall, Mr Stevens gave a positive outlook of the country’s economy. He said that although the growth of China’s economy -- to which the economy of Australia is closely connected -- has slowed in the early part of the year, it “remains generally in with policymakers’ objectives.”

He also added that this year’s economic growth has been “somewhat firmer” compared to last year. Mr Stevens presented several reasons for this, including strong increase in the resources exports, although he also mentioned seeing “smaller increase in such exports” in the coming quarters.

In addition, he noted a moderate growth in consumer demand and foresees a “strong expansion” in the country’s housing construction figures. This reflects the forecast made by the Australian Construction Industry Forum (ACIF), which sees an average annual growth of 2.3 per cent from the period of 2013-14 to 2022-23, which will peak around 2017-18, but will grow moderately after that.

As for Australia’s labour market, the Governor said that although there have been some improvement in its indicators, it may take time before a consistent decline in unemployment will be seen. In April, the country’s unemployment rate has remained steady at 5.9 per cent, 11,561,400 jobs have been added, and 723,800 have been lost, according to the Australian Bureau of Statistics.

Inflation, meanwhile, is seen to be within the RBA’s 2-3 per cent target in the next two years.

When it comes to lending, Mr Stevens said that the while the current interest rates are very low, he also noted that these rates have even gotten lower for some borrowers over the past several months. And although there was an increase in house prices over the past year, he said that there are signs that it has slowed down recently.


RBA Leaves Cash Rate Unchanged in May

May 08, 2014

The Reserve Bank of Australia (RBA) announced earlier today that it would leave the cash rate at 2.5 per cent.

Unemployment in the country has risen over the past year, although there have been signs of improvement in recent months. The rate hovered between 5.4-5.8 in 2013, but shot up to 6.0 in February and March this year. It then went down to 5.8 in April, which translated to a growth in employment by 18,100. According to the RBA, however, “it will probably be some time yet before unemployment declines consistently.”

Other areas in the economy remain a mixed bag, such as the country’s trade balance, which fell under the market’s expectations as it came out at 731 million instead of 1,200 million in March. This was due to the 2 per cent contraction in exports and imports that remained flat during the period. The Australian dollar, meanwhile, has rallied over the past several months, eliciting a positive reaction from the stock market. The RBA isn’t as positive about the value of the dollar as it said that, “[t]he exchange rate remains high by historical standards.”

As for inflation, a recent report revealed that it fell in Q1, but remains within the preferred level by the RBA. This has been due to the decline in the growth in wages. “Inflation is expected to be consistent with the 2-3 per cent target over the next two years,” according to the RBA’s statement.

The most apparent effect of the record-low cash rates has always been the growth in demand for home loans. Although building permits in March have fallen by 3.5%, it has been up by 20% over the past 12 months.

All in all, the cash rate is largely seen to remain at its current level in the foreseeable future, at least until the economy shows a more sustained and more consistent growth.


Australia Cash Rate Stays at 2.5%

April 01, 2014

The Reserve Bank of Australia (RBA) said that it would maintain current cash rates in its monetary policy statement released today. RBA Governor Glenn Stevens said in the statement that the Bank decided to keep rates at 2.5% because the monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. He added that having a period of stability in the rates is the "most prudent course".

As with previous statements, the RBA's view of the global and local economy remain consistent. On a global scale, Mr Stevens said that although the economy was a "bit below trend" last year, the Bank remains optimistic of a recovery this year.
Meanwhile, the Australian economy grew slower than expected in 2013. Mr Stevens noted, however, that there was an increased consumer demand over the summer, and that he foresees a growth in housing construction. There are also indicators of improved business conditions and confidence, and a rise in exports. Investments in the resources sector "is set to decline significantly", and investment from other sectors "are only tentative" at the moment, as businesses await more proof that business conditions have improved.

Mr Stevens also said that demand for labour has "remained weak", leading to higher unemployment figures. The RBA sees it rising "a little further", which could curb inflation with their target rate.

As for the Australian Dollar, the RBA Governor once again mentioned that the currency "remains high by historical standards". This came after the aussie's value rose over the past few weeks on the country's positive economic data, such as the huge increase in fulltime employment in February. However, the wording was weaker than in previous statements, particularly those made late last year, where the Bank said the currency was "overvalued".

Overall, however, the RBA remains optimistic about the effect of its "continued accommodative monetary policy". Mr Stevens said that it "should provide support to demand, and help growth to strengthen over time".


Cash Rates Stay at 2.5%

March 04, 2014

The Reserve Bank of Australia (RBA) announced today that it will maintain cash rates at 2.5%. According to his statement, RBA Governor Glenn Stevens said that the current monetary policy is "appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target." Thus, the Board concluded that keeping rates in the foreseeable future is "the most prudent course".

The statement differed little from what the RBA said in the previous months. First, they noted the accommodative financial conditions worldwide. They also added that the United States and the European Union, and Japan are showing signs of growth and recovery. Meanwhile, growth in China "remains in line" with the objectives of policymakers.

In Australia, Mr Stevens pointed out the "slightly firmer" consumer demand in the country, which is a sign of "a solid expansion in housing construction." There are also improvements in the country's business conditions and confidence, as well as its number of exports. The RBA also maintained that investments in the resources sector are "set to decline significantly." Although there are signs of increasing investment from other sectors, Mr Stevens said that that is only tentative. All in all, he said, "public spending is scheduled to be subdued."

There is also the continued rise in the country's unemployment rate, and a decline in the growth in wages. "If domestic costs remain contained, some moderation in the growth of prices for non-traded goods could be expected over time, which should keep inflation consistent with the target, even with lower levels of the exchange rate."

The RBA expects that the unemployment rate will continue to rise. In the long term, however, they expect growth to strengthen with the aid of low interest and exchange rates. They also foresee the inflation rate to remain with their 2-3% target in the next two years.

Meanwhile in other areas, here is what Mr Stevens had to say:

"Monetary policy remains accommodative. Interest rates are very low and savers continue to look for higher returns in response to low rates on safe instruments. Credit growth remains low overall but is picking up gradually for households. Dwelling prices have increased significantly over the past year. The decline in the exchange rate seen to date will assist in achieving balanced growth in the economy, though the exchange rate remains high by historical standards."


Cash Rate in Australia Stays at 2.5%

Feb. 05, 2014

Governor Glenn Stevens of the Reserve Bank of Australia (RBA) announced earlier today that the Bank would maintain rates at 2.5%. 

The RBA, which met for the first time this year, generally delivered the same statement it had over the past few months. 

However, absent from the statement was the RBA's thoughts on the Australian dollar. During a number of his previous statements, Governor Stevens said that the dollar remained 'uncomfortably high'. Rather, he focused on the growth in the country's consumer demand, in housing construction, and its economy in general. In addition, he said that there is some improvement in indicators of business conditions and confidence.

The RBA's outlook on the country's economy and unemployment remained consistent with its previous statements. Governor Stevens had this to say:

"[W]ith resources sector investment spending set to decline significantly, considerable structural change occurring and lingering uncertainty in some areas of the business community, near-term prospects for business investment remain subdued. The demand for labour has remained weak and, as a result, the rate of unemployment has continued to edge higher. Growth in wages has declined noticeably."

The Governor also noted the higher-than-expected increase in inflation in December. He said that it may be due in part to the faster than expected effects of the lower exchange rate. He noted, however, that "domestic prices also continued to rise at a solid pace, despite slower growth in labour costs."


Cash Rate Stays at 2.5%, AUD Still Uncomfortably High

Dec. 03, 2013

As expected, the Reserve Bank of Australia (RBA) announced that it would maintain rates at 2.5%. The announcement was made by RBA Governor Glenn Stevens through a statement. Today's meeting is the last for the RBA this year. The next one will be in February 2014.

In his statement, Governor Stevens said that the Australian economy has been growing "a bit below trend", as the country adjusts to lower levels of mining investment. While the RBA hopes that other industries would pick up after the mining sector, the Governor said that "considerable uncertainty surrounds this outlook".

There has been an improvement in terms of household and business sentiment, but Governor Stevens mentioned that "it is still unclear how persistent this will be".

As for inflation, it is "consistent with the medium-term target". The RBA expects it to remain that way in the next 1-2 years.

The full effects of the RBA's monetary policy are still coming through, according to the Governor. Although there have been signs of increased demand for finance by households, he said that "the pace of borrowing has remained relatively subdued".

Governor Stevens also made mention of the Australian dollar's current value. As with previous statements, the he said that the bank still sees it as "uncomfortably high".

Overall, today's statement differed little from previous ones given out over the past few months.

Some analysts say that the 2.5% interest rate would remain throughout the rest of 2014, which would then be followed by an interest rate hike some time in the first half of 2015. However, it is still too early to find out whether it is the case or not.


RBA Keeps Cash Rate Unchanged

Nov. 06, 2013

Reserve Bank of Australia (RBA) Governor Glenn Stevens said in a statement today that the RBA decided to keep rates unchanged at 2.5 per cent.

Not much has changed in the statement as compared to Mr Stevens' previous ones. For one, he said that unemployment in Australia continues to rise. "This is likely to persist in the near term, as the economy adjusts to lower levels of mining investment."

Meanwhile, inflation is well within the RBA's medium-term target. They expect it to remain so in the next one to two years.

Despite the rounds of rate cuts over the past few years, Mr Stevens said that: "[t]he full effects of these decisions are still coming through and will be for a while yet."

Demand for finance by households grew, even if in general, borrowing is "subdued". This means that more and more Australians have been taking advantage of the low rates that were the consequence of the cuts made by the RBA.

A slight difference in previous statements is in the Reserve Bank's growing concern over the value of the Australian dollar. Mr Stevens said that: "while below its level earlier in the year, is still uncomfortably high". He added that: "a lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy". He did not explain further how the RBA will plans to achieve this.

In closing, the Governor had this to say: "[a]t today's meeting, the Board judged that the setting of monetary policy remained appropriate. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target."

This could mean that the RBA would still consider further rounds of cuts in the future as needed. Of course, an increase in rates cannot be discounted entirely as well.


RBA Keeps Rate at 2.5%

Oct. 01, 2013

Once again, the Reserve Bank decided to maintain the cash rate at 2.5%.

Little has changed in the RBA’s statement, which was delivered by RBA Governor Glenn Stevens.

According to Mr Stevens, Australia’s economy, “has been growing a bit below trend over the past year.” As with earlier statements, he said that the RBA expects this to continue due to the “lower levels of mining investment”. He also mentioned the increasing unemployment, and that inflation “has been consistent with the medium-term target.”

The Governor also mentioned that there has been an improvement in household and business sentiment indicators, although he said it is “too soon” to determine if the trend will persist.

As for the RBA’s easing in monetary policy over the past two years, he said it has helped “interest-sensitive spending and asset values”. But Mr Stevens said that the full effects of these decisions are still coming through, and will be for a while yet.” He added that the pace of borrowing “remained relatively subdued”, and that there is “a shift in savers’ behaviour in response to declining returns on low-risk assets.”

Also, the RBA still prefers a weaker Australian dollar. “A lower level of the currency than seen at present would assist in rebalancing growth in the economy.”

Based on these factors, the RBA decided that the current rate remains “appropriate”. Mr Stevens closed his statement by saying that, “the Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target.”


RBA Cuts Rates by 25 bps

Aug. 06, 2013

The Reserve Bank of Australia (RBA) announced a 25-basis-point cut in cash rates earlier today. This brought down rates to a new record-low of 2.5%.

RBA Governor Glenn Stevens said in his statement that, "the Board has previously noted that the inflation outlook could provide some scope to ease policy further, should that be required to support demand." Based on their meeting and on the recent domestic and international economic data, the Board decided that, "a further decline in the cash rate was appropriate."

At a global level, the Board saw that "financial conditions remain very accommodative," although there was a marked rise in sovereign bond yields. In addition, there was an increase in volatility in financial markets, affecting several emerging market economies in the process.

In the domestic economy, the Governor said that it, "has been growing a bit below trend over the past year." The trend is expected to continue as the levels of mining investment lowers. Also, unemployment rate in Australia has increased, although inflation has been within the RBA’s medium-term target.

The lower cash rate, "has supported interest-sensitive spending and asset values." Although borrowing has yet to pick up, the Governor said that, "recently there are signs of increased demand for finance by households."

The Australian dollar has seen a massive drop against the greenback over the past few months, "although it remains at a high level." A further drop in its value, "would help to foster a rebalancing of growth in the economy," according to Mr Stevens.

The rate cut was in line with analysts' expectations after a weak performance from China and a stronger greenback over the past few months. Another round of cut is expected later this year, which analysts speculate could happen in November or earlier. The RBA hinted at this as well, as Mr Stevens also mentioned that the RBA will, "continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time."


RBA Keeps Rates at 2.75%

July 02, 2013

The Reserve Bank of Australia (RBA) announced today that it will maintain the cash rate at 2.75%.

RBA Governor Glenn Stevens echoed previous statements that, "the easier financial conditions now in place will contribute to a strengthening of growth over time, consistent with achieving the inflation target."

According to him, this was the reason the Board decided that, "the stance of monetary policy remained appropriate for the time being. [It] also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand."

Mr Stevens also mentioned the current economic conditions in Australia, which, "has been growing a bit below trend over the recent period." He pointed to the lower mining investment, which has been the country's main economic driver in the past. In addition, the Governor also spoke about the rising unemployment rate and the moderation of the growth in labour costs.

Meanwhile, Mr Stevens also spoke about the increased demand for finance by households despite the generally subdued pace of borrowing in the country.

There was also mention about the Australian dollar as he did with previous statements. The Governor said that the aussie has depreciated by 10 percent since early April, "although it remains at a high level." He mentioned the possibility of the exchange rate depreciating further in the future as well. This would, "help to foster a rebalancing of growth in the economy."

On a global level, Mr Stevens said that the, "financial conditions remain very accommodative." He added that, "a reassessment by the market of the outlook for monetary policy in the United States has seen a noticeable rise in sovereign bond yields from exceptionally low levels. Volatility in financial markets has increased and there has been some widening of credit spreads."

The RBA previously cut cash rates by 25bps in May, bringing the rate to its lowest level since the RBA began setting monetary policy. Analysts still expect another round of 25bps cut within the year, which could bring down the rate further to 2.5%.


Cash Rates Remain at 2.75%

June 04, 2013

The Reserve Bank announced no rate cut in its monetary policy decision this month. The rate thus remains at 2.75% after last month's 25bps cut?

In his statement, RBA Governor Glenn Stevens said that the Board decided that its stance in the monetary policy "remained appropriate for the time being." He also added that the current inflation outlook "may provide some scope for further easing."

At an international level, Mr Stevens said that the financial conditions are "very accommodative." Meanwhile, he also mentioned that growth in the country has been "a bit below trend." He added further that the unemployment rate in the country has increased over the past year, while the outlook on inflation is expected to remain consistent with the Reserve Bank's medium-term target. The RBA also expects it to stay that way over the next one to two years.

Mr Stevens also made mention of the previous cut's effect on the exchange rate. Although it has resulted to the depreciation of the Australian dollar, the RBA Governor said, "it remains high considering the decline in export prices that has taken place over the past year and a half." The statement echoed that of the statement the Reserve Bank made last month.

The cash rate thus remains at 2.75%, which is the lowest so far since the RBA began setting monetary policy. Analysts foresee another round of a 25bps cut within the year, which would lower rates further to 2.5%.

All in all, the RBA's statement has changed little, if at all, since their last announcement. Again, the inflation rate remains consistent with their outlook, unemployment has risen, and the value of the Australian dollar remains high. Now it remains to be seen whether the Reserve Bank would need another round of cut within the year, and if so, how it would impact the country's economy as a whole.


RBA Cuts Rate to Record Low

May 07, 2013

The Reserve Bank of Australia (RBA) announced today a 25bps cut to interest rates from 3% to 2.75%. This puts the current rate to the lowest it has been so far since the RBA began setting monetary policy.

While analysts were divided on whether or not there would be a 25bps cut this May, they continue to foresee another 25bps cut later in the year. This would put the interest rate at 2.5%.

Increased Unemployment, Low Inflation

In his statement, RBA Governor Glenn Stevens pointed out that growth in the country has somewhat slowed down during the second half of 2012, a trend that has continued up to the present. Aside from that, the unemployment has also increased a little, “though it remains relatively low.”

Meanwhile, inflation was “a little lower than” expected. Some analysts point this out as the main reason why the Reserve Bank found it fit to cut rates further.

Stevens said in his statement that, “the Board has previously noted that the inflation outlook would afford scope to ease further, should that be necessary to support demand. At today's meeting the Board decided to use some of that scope. It judged that a further decline in the cash rate was appropriate to encourage sustainable growth in the economy, consistent with achieving the inflation target.”

Strong Dollar

While the previous rate cuts have begun to have a positive impact on the economy, this was not the case on the Australian Dollar. “The exchange rate… has been little changed at a historically high level over the past 18 months, which is unusual given the decline in export prices and interest rates during that time.”

The announcement has somewhat created an immediate effect, as the Australian and US Dollar pair fell from 1.025 to around 1.018 after the announcement.


RBA Maintains Cash Rate in April

April 03, 2013

The Reserve Bank of Australia (RBA) earlier announced its decision to leave the cash rate unchanged at 3 per cent.

It was a move that surprised no one, as analysts continue to expect no changes in the cash rate until the middle of the year.

As with the previous months, the RBA decided to maintain a wait and see approach on the effect of the recent rate cuts to the economy.

"At today's meeting, the Board judged that it was prudent to leave the cash rate unchanged. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target over time," RBA Governor Glenn Stevens said in a statement.

The statement also varied little from the previous month's where Mr Stevens cited that although Europe is still in a recession, the United States has shown a "moderate expansion", while Australia's top trading partner China is showing signs of economic growth.

The governor also echoed what was already stated in the past that the Australia's "peak in resource investment is drawing close." This would then give other areas of demand to strengthen. He also cited moderate growth in private consumption, although it is on a level lower than those seen in previous years.

Meanwhile, he also provided a positive outlook for other areas of the economy. "While the near-term outlook for investment outside the resources sector is relatively subdued, a modest increase is likely to begin over the next year. Dwelling investment is slowly increasing, with rising dwelling prices and high rental yields. Exports of natural resources are strengthening."


RBA Maintains Rates in March

March 06, 2013

The Reserve Bank of Australia (RBA) announced no change in cash rates after its board meeting yesterday.

RBA Governor Glenn Stevens said in a statement that the RBA decided to maintain rates at 3 per cent and, "continue to assess the outlook and adjust the policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target over time."

Stevens also said that while global growth is forecast to be "a little below average for a time", the risks have diminished over the past several months. He attributed these to several factors including the moderate expansion of the US economy, the fewer financial strains experienced by Europe, as well as the signs of stabilisation in the Chinese economy.

There are also signs of growth in the domestic economy, said Stevens. "[Growth] was close to trend over 2012, led by very large increases in capital spending in the resources sector, while some other sectors experienced weaker conditions. Looking ahead, the peak in resource investment is approaching. As it does, there will be more scope for some other areas of demand to strengthen."

The governor also mentioned positive developments in private consumption, dwelling investment and exports of natural resources. While the near-term outlook for non-residential building investment and investments outside the resources sector remain subdued, Stevens said that, "recent data suggest some prospect of a modest increase during the financial year."


RBA Maintains Rates at 3 Per Cent

Feb. 06, 2013

The Reserve Bank of Australia (RBA) announced no new changes in the country’s current cash rates on Tuesday.

Rates remain at three per cent, currently the lowest since April 2009 during the height of the global financial crisis. The RBA last announced cuts in December last year when it reduced rates by 25 per cent to help encourage growth in demand and inflation outcomes.

During the first meeting of the year, RBA Governor Glenn Stevens mentioned a number of key factors that affected the decision. In the international economy, Stevens said that the economic risks in the United States and Europe have abated, and the growth in China has stabilised. Meanwhile, he also reported a positive outlook in the local economy including capital spending in the resources sector, a moderate growth in private consumption spending, and an inflation rate consistent with the organisation’s medium-term target.

The RBA’s announcement is in line with earlier expectations from analysts who believed that the Central Bank would maintain its wait-and-see approach to the effect of the recent cuts as well as the changes in the local and international economy.


RBA Cuts Rates by 25 Points

Dec. 07, 2012

The Reserve Bank of Australia (RBA) announced a 25-point cut in cash rates after its final meeting for the year on Tuesday.

The announcement confirmed market expectations of a final rate cut by end of the year. This brought down rates from 3.25 per cent to three per cent, a figure at par with the lowest rate in April 2009 during the height of the global financial crisis. Analysts expect two further rounds of cuts by the middle of next year, potentially putting rates at 2.5 per cent.

The RBA will meet again on February 5 next year.

RBA Governor Glenn Stevens said in a statement that the cuts, "will help to foster sustainable growth in demand and inflation outcomes consistent with the target over time." The RBA’s outlook of the global economy remains subdued, while volatility persists in some areas of the local market.

Meanwhile, the value of the Australian dollar recovered from last week’s dip after the RBA's announcement. From Monday's ¥85.64, it jumped to ¥85.71 the following day. Australian bonds were also up slightly following the cut, with 10-year bond futures contract up from 96.900 to 96.910, while three-year bond futures contract was at 97.390 from the previous 97.380.


RBA Expected to Cut Rates Anew

Dec. 03, 2012

Analysts expect another round of rate cuts when the Reserve Bank of Australia (RBA) conducts its final monthly meeting for the year tomorrow, December 4.

Experts estimate a drop of 25 points this month, which could bring down the current rate of 3.25 per cent to just three per cent. After tomorrow's meeting, the RBA will meet again in February next year.

Last month, the RBA maintained the rates after lowering it by 25 points in October.

The Australian dollar's value has already dropped in anticipation of the expected cut. From Thursday's 104.67 US cents, it dipped to 104.33 US cents last Friday. Other factors such as the continuing weak performance of the country's mining, manufacturing, and services industries are seen to suggest a further cut in rates.


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