The Reserve Bank of Australia (RBA) did again note that low inflation meant there was room for a cut in the 2 percent cash rate should signs of recovery disappoint in coming months.
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While commodity prices have continued to slide this week, the Euro has begun to soften somewhat against a number of rivals following some disappointing German Retail Sales.
SYDNEY, Dec 1 Australia’s economy enjoyed a huge lift last quarter from a rebound in resource exports, helping fill a hole left by slumping business investment and lessening the need for another cut in interest rates.
“The CAMA RBA Shadow Board on balance prefers to keep the cash rate on hold, attaching a 67 per cent probability to this being the appropriate policy setting”. By taking dovish tones such as “inflation is low and should remain so”, the Australian central bank is able to prevent the Australian dollar from strengthening further.
After six straight holds and a strong employment report for October, most market participants expect the RBA to hold at this juncture.
The Indian central bank is expected to maintain an “accommodative” policy stance, according to various estimates, and a Bank of America Merrill Lynch research report also predicted a 25-basis point cut in February.
We are confident there will be no change in the overnight cash rate. Reserve bank of Australia (RBA) after few sharp reduction in rates has kept policy unchanged from mid of the year as outlook improved and weak Aussie contributed to deterioration of terms of trade.
At 0700 AEDT on Monday, the local unit was trading at 71.95 US cents, down from 72.30 USA cents at Friday’s Asian close.
He forecasts a return to phrases such as “further depreciation seems both likely and necessary”, which were dropped in favour of “the Australian dollar is adjusting to the significant declines in key commodity prices” from the August statement on.
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Economists are predicting ahead of data due Wednesday the economy grew 0.7 percent in the three months through September from the prior quarter and 2.3 percent from a year earlier.
