Australia: RBA leaves rates unchanged for eighth consecutive month
August 2, 2011
At its 2 August 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 eighth consecutive meeting that monetary authorities maintained rates. In the accompanying statement, monetary authorities expressed concern regarding the global economic scenario and in particular regarding the likelihood of a slowdown in global economic activity. At the domestic level, the RBA stressed that a full recovery in those sectors affected by natural disasters at the beginning of the year is not likely to take place before the beginning of next year. Accordingly, the Bank believes that growth in real GDP through 2011 is now likely to be at about trend. Finally, the RBA is worried about inflationary developments, as measures that give a better indication of the trend in inflation have begun to rise over the past six months. 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