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:
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...]