Interest rates remain unchanged
June 1, 2010
Turmoil in international markets over the last few weeks has prompted the Reserve Bank to leave interest rates unchanged following a board meeting in Sydney today. The decision to leave the official cash rate at 4.5% was widely anticipated by analysts.
However, many of these same analysts are anticipating at least two more interest hikes before the end of year.
In his comments justifying the pause, the Reserve Bank Governor Glenn Stevens mentioned the creditworthiness of several European countries and the effect this had had on global equity markets.
”The Australian dollar fell sharply as part of this adjustment,” Mr Stevens said.
”Commodity prices have also softened, though those important for Australia remain at very high levels.”
Despite this, Mr Stevens said global growth was tipped to be around trend pace in 2010.
”In Asia, growth has continued to be quite strong and may need to moderate in the year ahead,” Mr Stevens added.
Terms of trade remain strong in Australia with inflation set to remain at the upper end of the target 2% - 3% range.
However, many of these same analysts are anticipating at least two more interest hikes before the end of year.
In his comments justifying the pause, the Reserve Bank Governor Glenn Stevens mentioned the creditworthiness of several European countries and the effect this had had on global equity markets.
”The Australian dollar fell sharply as part of this adjustment,” Mr Stevens said.
”Commodity prices have also softened, though those important for Australia remain at very high levels.”
Despite this, Mr Stevens said global growth was tipped to be around trend pace in 2010.
”In Asia, growth has continued to be quite strong and may need to moderate in the year ahead,” Mr Stevens added.
Terms of trade remain strong in Australia with inflation set to remain at the upper end of the target 2% - 3% range.
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