The Reserve Bank of Australia today left its cash rate target unchanged at 3.0%. In a statement that accompanies the decision, RBA Governor Stevens noted that monetary policy in Australia has been eased significantly. "Market and mortgage rates are at very low levels by historical standards, despite recent small increases" he said. Prospects for inflation problems seemed distant, even though the Australian economy appears to be coping much better that most of its trading partners. He also noted that Australian business loan rates are below average. "The effects of these [low interest rate] changes will still be coming through for some time yet. Fiscal measures are also providing considerable support for demand", Stevens said. The RBA decision to hold rates at 3% leaves them 0.5% above the New Zealand official rate, and probably embeds the premium Australian bonds have over New Zealand bonds from a uridashi and eurokiwi demand perpsective. This may weigh on the NZD exchange rate during July and August. The next review in Australia is on August 4, 2009, five days after the RBNZ reviews the OCR here.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.