Monetary policy outlook appropriate - RBA
(4 July 2012 – Australia) The Reserve Bank of Australia (RBA) left the rates on hold at 3.5 percent as predicted.
The low inflation rate has given the central bank more scope to pare interest rates if needed. Even so, it’s not clear that the overall economy requires additional help.
The country’s March quarter gross domestic product expanded at twice the pace expected by economists.
Building approvals for May posted their biggest monthly increase in more than three decades, according to official figures out on Tuesday.
The RBA has to weigh conflicting forces on the economy. The mining boom continues to suck in huge investment even as commodity prices retreat from record highs.
On the other hand, cautious consumers are opting to save more of their money, and house prices - a key gauge of wealth for many - are down in most cities over the past year.
The RBA is also keen to hold back some of its firepower. The bank repeated comments made in previous rate statements that Europe with its ongoing debt crisis remains a potential source of adverse shocks - adding 'for some time' in its commentary.
'At today's meeting, the Board judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate,' the RBA's governor Glenn Stevens said in Tuesday's statement.
The country’s March quarter gross domestic product expanded at twice the pace expected by economists.
Building approvals for May posted their biggest monthly increase in more than three decades, according to official figures out on Tuesday.
The RBA has to weigh conflicting forces on the economy. The mining boom continues to suck in huge investment even as commodity prices retreat from record highs.
On the other hand, cautious consumers are opting to save more of their money, and house prices - a key gauge of wealth for many - are down in most cities over the past year.
The RBA is also keen to hold back some of its firepower. The bank repeated comments made in previous rate statements that Europe with its ongoing debt crisis remains a potential source of adverse shocks - adding 'for some time' in its commentary.
'At today's meeting, the Board judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate,' the RBA's governor Glenn Stevens said in Tuesday's statement.
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