THE Reserve Bank has left the official cash rate on hold for the third consecutive month. Today, the bank did not suggest that further depreciation of the Australian dollar was “both likely and necessary” but simply stated that: “the Australian dollar is adjusting to the significant declines in key commodity prices”.
Advertisement
The global economy is expanding at a moderate pace, but some key commodity prices are much lower than a year ago.
Numerous experts felt that it was too early for another rate cut, given that the Reserve Bank lowered the cash rate by 0.25 per cent in February and by the same amount in May.
“Further information on economic and financial conditions to be received over the period ahead will inform the Board’s ongoing assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target”, the bank said in a statement.
All 16 economists surveyed by AAP expected the cash rate to remain unchanged on Tuesday, and only four expect any movement before the end of the year.
While heat in the housing market was mentioned the RBA says trends have been more varied across various cities.
The decision followed new figures from the bureau of statistics showing a sharp lift in retail spending through June.
The Reserve Bank of Australia has delivered the result of its monthly board meeting. Sales of household goods drove the result while there was a small drop in food sales.
RBA Governor Glenn Stevens has recently sounded reluctant to cut again as he balances the need to underpin a sluggish economy against the risk of over stimulating an already hot housing market.
Advertisement
While the domestic side of the economy is improving, separate trade figures showed a widening in the nation’s trade deficit.
