Australia: RBA leaves rates unchanged for ninth consecutive month
September 6, 2011
At its 6 September meeting, the Reserve Bank of Australia (RBA) left the cash rate unchanged at 4.75%, as was widely expected by market analysts. The decision marked the ninth consecutive meeting that monetary authorities maintained rates. According to monetary authorities, the outlook for the global economy is now less clear than it was earlier in the year. At the domestic level, the RBA stressed that little evidence is available to gauge any effects of the European and US problems. On the one hand, prices for key export commodities remain strong and investment in the resources sector is picking up. On the other hand, however, a strong exchange rate and prudent household behaviour are having a noticeable dampening effect on economic activity. Accordingly, the RBA sees weaker growth in the near term than estimated earlier in the year. Regarding inflationary developments, the RBA expects a decline in consumer price inflation by the end of the year. However, measures that give a better indication of the trend in inflation point to an upward risk in inflation going forward. Accordingly, the RBA remains concerned that inflation might rise above the 2-3% target in the medium term.
Author: Armando Ciccarelli, Head of Data Solutions