Australia: RBA leaves rates unchanged as recovery stutters
July 5, 2011
At its 7 July 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 seventh consecutive meeting that monetary authorities maintained rates. In the accompanying statement, monetary authorities stressed that reconstruction efforts in key sectors affected by natural disasters at the beginning of the year proceed slower than expected. Accordingly, the Bank believes that growth through 2011 is now unlikely to be as strong as earlier forecast. In addition, the RBA believes that CPI inflation will be close to target over the next 12 months, as price pressures in the agricultural sector following the Yasi cyclone are expected to wane going forward. Therefore, the RBA believes the current mildly restrictive monetary policy stance remains appropriate.
Author: Armando Ciccarelli, Head of Data Solutions