Central Bank Outlook: Australia Policy Held, Extended Policy Pause?

Posted July 3, 2012 by Editor

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• As expected, the Reserve Bank of Australia (RBA) decided to keep the Cash Rate unchanged at 3.50% at its July meeting, following rate cuts totaling 75 bps at the previous two meetings.
• The RBA Statement was largely unchanged in its view of the global economy: U.S. growth and recovery from the 2011 natural disasters in Asia are lifts to Australian growth, while the slowdown in China and weakening in Europe were cited as headwinds. The domestic economy experienced stronger than expected growth and better labor market conditions, and expects inflation to remain close to the target over the next two years. The RBA judged its current monetary policy stance as being appropriate.
• At least in the near-term, it appears that policy will be on an extended pause over the coming months, with further adjustments possible later in the year.

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