Board “cannot wait”
(19 October 2010 – Australia) Minutes from the Reserve Bank of Australia’s (RBA) monthly monetary policy meeting have revealed that the board "can’t wait indefinitely" to raise rates as inflationary pressures mount.
The minutes show that the board believes that while the overall global outlook has broadly unchanged since the RBA board's previous meeting, interest rates would need to rise 'at some point'.
The board decided to keep rates unchanged at 4.5 percent saying that they recognised that they could not wait indefinitely to see whether risks materialised, but that they had the flexibility to do so on this occasion.
Board members decided to leave the cash rate unchanged as the economy is expected to continue growing at trend in the near term.
Credit growth had also softened and the rise in the exchange rate would effectively be 'tightening financial conditions at the margin', the board said.
Board members also said it was 'still possible' that downside risks to global growth could materialise.
'Members felt these arguments were finely balanced,' the minutes said.
Overall, they concluded that it would be 'appropriate to hold the cash rate steady for the time being".
The board decided to keep rates unchanged at 4.5 percent saying that they recognised that they could not wait indefinitely to see whether risks materialised, but that they had the flexibility to do so on this occasion.
Board members decided to leave the cash rate unchanged as the economy is expected to continue growing at trend in the near term.
Credit growth had also softened and the rise in the exchange rate would effectively be 'tightening financial conditions at the margin', the board said.
Board members also said it was 'still possible' that downside risks to global growth could materialise.
'Members felt these arguments were finely balanced,' the minutes said.
Overall, they concluded that it would be 'appropriate to hold the cash rate steady for the time being".
Subscribe