RBA points to rates staying put
(20 April 2011 – Australia) The medium-term inflation outlook was noted as a main reason the Reserve Bank of Australia’s (RBA) policy-making board saw no case to change the official cash rate in April.
'Given the outlook for the economy, and in particular the high level of the terms of trade and the prospective further large increase in investment, members considered that this stance remained appropriate so as to ensure that the medium-term inflation outlook remained consistent with the target.
"Members therefore did not see a case to change the cash rate,' the RBA said in the minutes of its 5 April policy meeting.
The RBA left its cash rate target on hold at 4.75 percent, and untouched since it last raised rates in November, by 25 basis points.
In the minutes the RBA said its board had noted that loan rates facing businesses and households were 'a little above average levels', thanks to earlier official rate increases.
The RBA said that was appropriate, given the need to keep inflation consistent with the two to three percent medium term target the central bank imposed on itself in 1993.
The bank acknowledged that the pace of employment growth had not only slowed since late 2010 but that forward indicators suggested it would continue 'at a more moderate pace than seen last year'.
Wage pressures in the labour market have yet to become widespread though a major challenge for the economy will be managing a high rate of investment in the gas sector especially, the RBA said.
Queensland's devastating floods and cyclone mean first quarter headline inflation will likely spike higher and disruption to coal exports will result in growth in the quarter being held down by more than earlier anticipated, but the board said it would look through these developments.
While employment growth has slowed, the outlook for the jobs market remains positive. The 'considerable variations' across the economy are broadly in line with the bank's forecasts, it said.
"Members therefore did not see a case to change the cash rate,' the RBA said in the minutes of its 5 April policy meeting.
The RBA left its cash rate target on hold at 4.75 percent, and untouched since it last raised rates in November, by 25 basis points.
In the minutes the RBA said its board had noted that loan rates facing businesses and households were 'a little above average levels', thanks to earlier official rate increases.
The RBA said that was appropriate, given the need to keep inflation consistent with the two to three percent medium term target the central bank imposed on itself in 1993.
The bank acknowledged that the pace of employment growth had not only slowed since late 2010 but that forward indicators suggested it would continue 'at a more moderate pace than seen last year'.
Wage pressures in the labour market have yet to become widespread though a major challenge for the economy will be managing a high rate of investment in the gas sector especially, the RBA said.
Queensland's devastating floods and cyclone mean first quarter headline inflation will likely spike higher and disruption to coal exports will result in growth in the quarter being held down by more than earlier anticipated, but the board said it would look through these developments.
While employment growth has slowed, the outlook for the jobs market remains positive. The 'considerable variations' across the economy are broadly in line with the bank's forecasts, it said.
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