Reserve Bank Leaves Interest Rate Unchanged At 3%

Apr 02, 2013 Leave a Comment

The Reserve Bank has left the official cash rate unchanged at 3.0%.

The decision was taken at the bank’s Board meeting today. Rates were last reduced in December 2012. During 2012, rates fell by 1.25%. This followed a reduction of 0.5% in 2011.

In a statement, the Reserve Bank Governor, Glenn Stevens, said: “There are a number of indications that the substantial easing of monetary policy during late 2011 and 2012 is having an expansionary effect on the economy. Further such effects can be expected to emerge over time.”

Stevens said economic growth was “close to trend over 2012, led by very large increases in capital spending in the resources sector”. The peak in resource investment is “drawing close”, he said.

Inflation is consistent with the medium-term target of 2%.

The ALP was quick to release this graphic:

ALP

Statement from Glenn Stevens, Governor of the Reserve Bank of Australia.

At its meeting today, the Board decided to leave the cash rate unchanged at 3.0 per cent.

Global growth is forecast to be a little below average for a time, but the downside risks appear to be reduced. While Europe remains in recession, the United States is experiencing a moderate expansion and growth in China has stabilised at a fairly robust pace. Around Asia generally, growth was dampened by the earlier slowing in China and the weakness in Europe, but again there are signs of stabilisation. Commodity prices have declined somewhat recently, but are still at historically high levels.

Internationally, financial conditions are very accommodative. Risk spreads are narrow and funding conditions for financial institutions have improved. Long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Borrowing conditions for large corporations are similarly very attractive. Share prices are substantially above their low points. However, the task of putting private and public finances on sustainable paths in several major countries is far from complete. Accordingly, financial markets remain vulnerable to setbacks. [Read more...]

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Reserve Bank Leaves Interest Rates Unchanged

Mar 05, 2013 Leave a Comment

At its monthly meeting today, the Reserve Bank of Australia has left the cash rate unaltered.

The cash rate has been 3.0 per cent since the Reserve’s December board meeting.

Statement from Glenn Stevens, Governor of the Reserve Bank of Australia.

At its meeting today, the Board decided to leave the cash rate unchanged at 3.0 per cent.

Global growth is forecast to be a little below average for a time, but the downside risks appear to have lessened over recent months. The United States is experiencing a moderate expansion and financial strains in Europe are considerably reduced compared with the situation through much of last year. Growth in China has stabilised at a fairly robust pace. Around Asia generally, growth was dampened by the earlier slowing in China and the weakness in Europe, but again there are signs of stabilisation. Commodity prices are little changed recently, at reasonably high levels.

Sentiment in financial markets is much improved compared with the middle of last year. Risk spreads have narrowed and funding conditions for financial institutions are more favourable. Long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Borrowing conditions for large corporations are very attractive. Share prices have risen substantially from their low points. However, the task of putting private and public finances on sustainable paths in several major countries is far from complete. Accordingly, as seen most recently in Europe, financial markets remain vulnerable to occasional setbacks. [Read more...]

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Reserve Bank Governor Glenn Stevens Appears Before House Economics Committee

Feb 22, 2013 Leave a Comment

Glenn Stevens, the Governor of the Reserve Bank of Australia, has appeared before the House of Representatives Standing Committee on Economics.

Stevens told the committee that economic growth “was probably about trend in 2012 as a whole” but “our sense is that the economy has entered 2013 at a pace a little below that”.

Stevens said that “the economy will be adjusting to the peak if the mining boom and some other areas of demand will have room to grow more quicly than they have in recent years”. He said the threat of extreme financial instability in the euro area “has abated” and the United States has avoided the worse of the “fiscal cliff”. He said the slowdown in China has come to an end.

Text of opening statement by Reserve Bank Governor Glenn Steven to the House of Representatives Standing Committee on Economics.

In the six months since the August hearing, economic and financial conditions abroad have generally improved. We can see three key sets of developments.

First, the threat perceived in the middle of last year of extreme financial instability arising in the euro area – and, in the eyes of some, possible disintegration of the euro – has abated. This followed various important steps taken by European policymakers. Interest rates faced by some of the key sovereigns which were under acute pressure have declined markedly, and funding conditions for many European banks have improved to the point where some of the central bank funding that had been supplied has been repaid. These countries, and Europe generally, still face immense challenges and it is, as usual, important to stress that sentiment remains vulnerable to setbacks. But a truly disastrous outcome was, once again, avoided. [Read more...]

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Reserve Bank Cuts Interest Rates By 0.25%

Dec 04, 2012 Leave a Comment

The Reserve Bank has cut interest rates a further 0.25%.

The cash rate has been reduced from 3.25% to 3.00%.

The decision was announced at 2.30pm today. It is the fourth cut in interest rates this year. Rates have been reduced by 1.25% since this time last year and are at their lowest point since April 2009 during the global financial crisis.

Text of statement from Reserve Bank Governor Glenn Stevens.

At its meeting today, the Board decided to reduce the cash rate by 25 basis points to 3.0 per cent, effective 5 December 2012.

Global growth is forecast to be a little below average for a time. Risks to the outlook are still seen to be on the downside, largely as a result of the situation in Europe, though the uncertainty over the course of US fiscal policy is also weighing on sentiment at present. Recent data suggest that the US economy is recording moderate growth and that growth in China has stabilised. Around Asia generally, growth has been dampened by the more moderate Chinese expansion and the weakness in Europe.

Key commodity prices for Australia remain significantly lower than earlier in the year, though trends have been more mixed over the past few months. The terms of trade have declined by about 15 per cent since the peak, to a level that is still historically high.

Sentiment in financial markets remains better than it was in mid year, in response to signs of progress in addressing Europe’s financial problems, though Europe is likely to remain a source of instability for some time. Long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Capital markets remain open to corporations and well-rated banks, and Australian banks have had no difficulty accessing funding, including on an unsecured basis. Borrowing conditions for large corporations are similarly attractive and share prices have risen since mid year. [Read more...]

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Reserve Bank Leaves Interest Rates On Hold

Nov 06, 2012 Leave a Comment

The Reserve Bank has opted not to further reduce interest rates at its monthly meeting today.

The cash rate remains at 3.25%.

Statement from Reserve Bank Governor Glenn Stevens.

At its meeting today, the Board decided to leave the cash rate unchanged at 3.25 per cent.

Global growth is forecast to be a little below average for a time. Risks to the outlook are still seen to be on the downside, largely as a result of the situation in Europe, where economic activity is still contracting. Risks elsewhere seem more balanced. The United States is recording moderate growth, while recent data from China suggest growth there has stabilised. Around Asia generally, growth has been dampened by the more moderate Chinese expansion and the weakness in Europe.

Key commodity prices for Australia remain significantly lower than earlier in the year, though trends have been more mixed over the past couple of months, with some prices recovering some ground while others declined further. The terms of trade have declined by about 13 per cent since the peak last year, but are likely to remain historically high. [Read more...]

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