7 Mar 2017
Reserve Bank of Australia leaves rates unchanged
At today’s meeting, the RBA decided to leave the cash rate at 1.50%, following the same decision in February. The decision was expected given underlying economic conditions still warrant accommodative policy.
Immediately post the announcement, equity markets had pushed a little higher and the Aussie dollar had retreated after jumping just before the announcement (odd). The decision comes as no surprise given we expect the RBA to be on hold for most of this year.
The statement was effectively a carbon copy of last month’s statement (also expected) – transitioning economy, reasonable economic growth, inflation to remain low, global conditions improving, monetary policy setting to remain accommodative. Some subtle differences included specific mention of exports having risen strongly and non-business investment rising over the past year. The RBA also noted improvement in measures of business and consumer confidence, and that consumption growth was strong at the back end of 2016 against a backdrop of low household income growth.
The announcement explicitly left out forward guidance on future rate moves. The current low rate setting remains required to assist the economy transition, assisting to put downward pressure on the Aussie dollar and upward pressure on inflation (currently below the target range).
If this announcement raises questions about your personal situation, please feel free to contact us at any time.