Rates may stay steady
(5 November 2010 – Australia) The Reserve Bank of Australia’s shock interest rate rise may be the last for a while, according to a statement from the governing body.
On Cup Day the Reserve Bank surprised markets by raising the official cash rate by 0.25 percentage points to 4.75 percent.
In the Reserve Bank’s monetary policy statement the bank said that it had lowered its outlook for inflation of the December quarter to 2.75 percent, from 3.25 percent.
'The near term forecast for year ended inflation has been lowered, partly reflecting the recent appreciation of the exchange rate,' the RBA said in its statement.
'However the medium term outlook remains unchanged.
'In underlying terms inflation is expected to remain around 2.5 per cent until mid next year, before gradually rising to three per cent by the end of 2012.'
The Reserve Bank aims to keep inflation between two and three percent.
The central bank added that its forecast for Gross Domestic Product (GDP) growth is largely unchanged from six months ago.
The RBA expects economic growth through to December 2010 and June 2011 to stay at 3.5 per cent.
The bank expects GDP growth to rise to 3.75 by the end of December 2011 and stay at that level until June 2012, when it starts shooting for the four percent mark.
In the Reserve Bank’s monetary policy statement the bank said that it had lowered its outlook for inflation of the December quarter to 2.75 percent, from 3.25 percent.
'The near term forecast for year ended inflation has been lowered, partly reflecting the recent appreciation of the exchange rate,' the RBA said in its statement.
'However the medium term outlook remains unchanged.
'In underlying terms inflation is expected to remain around 2.5 per cent until mid next year, before gradually rising to three per cent by the end of 2012.'
The Reserve Bank aims to keep inflation between two and three percent.
The central bank added that its forecast for Gross Domestic Product (GDP) growth is largely unchanged from six months ago.
The RBA expects economic growth through to December 2010 and June 2011 to stay at 3.5 per cent.
The bank expects GDP growth to rise to 3.75 by the end of December 2011 and stay at that level until June 2012, when it starts shooting for the four percent mark.
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