This bias is expressed with the words “the inflation outlook MAY afford scope for further easing of policy, should that be appropriate to lend support to demand”.
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Yet today, the RBA simply said leaving rates unchanged was appropriate to support demand and it would continue to monitor inflation and the growth outlook.
“However, last week we noted the historical precedent of 2012 when the RBA cut by 0.5 per cent in May following increases of only 0.10 per cent in variable mortgage rates by the banks”, he said before the announcement.
The RBA lowered interest rates in both February and May this year, justifying the decision by pointing out lowered forecasts for economic growth.
“Inflation is low and should remain so, with the economy likely to have a degree of spare capacity for a few time yet”.
September quarter figures out last week show that inflation for the year to September was 1.5 per cent, well below the RBA’s two to three per cent target band.
The jobless rate has fluctuated between 6.0-6.4 percent, a decade high, over the past year, while spending by businesses outside the mining sector is yet to fill the gap left by falling resources investment.
Bendigo Bank has tended to keep its interest rates higher than regional rivals, but on a par with a few of the cheaper major banks.
“All eyes will be on the outcome of the RBA monetary policy decision”, Singapore’s United Overseas Bank said in a market commentary. “Growth in dwelling prices has remained mostly subdued in other cities”.
The Reserve Bank of Australia kept its official cash rate at a record-low 2.00%, where it has been since May. Overall conditions in the housing market are still described as “accommodative” and credit growth has increased a little in recent months. Stevens said house price strength in Melbourne and Sydney was showing signs of abating, which had been a concern for the central bank in the past.
He said a cut by the Reserve Bank could slow the rate of decline in the property market, but not enough to provide a big boost.
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“Supervisory measures are helping to contain risks that may arise from the housing market”, he said.
