RBA holds interest rates as global outlook shows improvement
(03 April 2013 – Australia) Interest rates remain on hold at 3 percent as the Reserve Bank of Australia (RBA) judged it was prudent to leave the cash rate unchanged.
RBA Governor Glenn Stevens said in a statement that the inflation outlook, as assessed at present would afford scope to ease policy further, if it is necessary to support demand.
Stevens added that the rates easing cycle appeared to have ‘‘an expansionary effect on the economy’’ and that ‘‘further such effects can be expected to emerge over time’’.
The statement also said: "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."
The RBA also pointed out that internationally, financial conditions are very accommodative with funding conditions improved and long-term interest rates faced by 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."
Stevens added that the rates easing cycle appeared to have ‘‘an expansionary effect on the economy’’ and that ‘‘further such effects can be expected to emerge over time’’.
The statement also said: "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."
The RBA also pointed out that internationally, financial conditions are very accommodative with funding conditions improved and long-term interest rates faced by 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."
Subscribe