Source: ABC News: 04 Apr 2012
The board of the Reserve Bank of Australia has left interest rates unchanged at 4.25 per cent at its monthly meeting today, as widely expected.
The decision leaves the official cash rate where it has been since December.
In a statement, Reserve Bank Governor Glenn Stevens said the board saw no need to alter the current level of rates given that growth was expected to remain around average, inflation was near the board's target range of 2 to 3 per cent, and commercial banks' interest rates were close to average.
But the board appeared to leave open the chance for a rate cut as soon as next month.
"At today's meeting, the board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation before considering a further step to ease monetary policy," Mr Stevens said.
Mr Stevens said while domestic demand grew at its fastest pace in four years in 2011, output expanded at a slower-than-average rate.
The board took note of the strong Australian dollar, which remains high despite a decline in the terms of trade, a situation Mr Stevens has previously described as "a bit odd".
And it highlighted the "considerable structural change" in the economy as the mining investment boom gathers pace and non-mining sectors slow.
On the international front, the board noted the global economy did not appear to be experiencing a deep downturn; while several European nations would see "very weak" economic conditions this year, the United States economy was seeing moderate growth and China's economy was likely to expand at a "more measured and sustainable pace" in the future.
But he warned Europe would remain "a potential source of adverse shocks" in the economy and on financial markets until the region's banks and economies were put on a "sound footing".
Westpac chief economist Bill Evans said the board's decision this month appeared to be a close call, and upcoming inflation figures may be enough to swing the balance in favour of a cut next month.
"Even though the Governor notes that 'data on demand and output' will also influence the decision in May, we would be surprised if a benign inflation print does not ensure a rate cut," Mr Evans said in a note on the decision.
"The slowdown in momentum in the fourth quarter appears to be persisting in the first few months of 2012 with weak reports for retail sales, building approvals, confidence, both business and consumer, and the February employment report. We are also confident that the inflation print will be benign."
The Australian dollar declined against most major currencies after the announcement and at 3:10pm (AEDT) was buying 104 US cents, 85.3 Japanese yen, 78 euro cents, 64.9 British pence and $NZ1.26.
None of the economists surveyed by Bloomberg had expected the RBA to ease rates, despite figures suggesting inflation had dipped, thereby creating conditions favourable for a cut.
The monthly TD Securities-Melbourne Institute Inflation Gauge showed the annual rate of inflation had reached a two-year low of just 1.8 per cent, below the board's target.
Official inflation data from the Bureau of Statistics are due on April 24, and the RBA's board members will be closely watching those figures before their next meeting on May 1.
The Truth Behind Payday Loans
There’s a lot been said about payday loans. Many claim that the interest rates charged are outrageous. Others say that they are the only source of finance available for those with less than perfect credit score. There is a bit of truth in both claims but there is much more to payday loans than meets the eyes. - read more
Personal Loans And The Consumer Credit Code
Understanding your rights as a consumer is essential in dealing with complex issues like personal loans and other finance. Here we reveal, in simple terms, how the Credit Code works for you. - read more
Managing Credit Card Debt
If your credit card debt is starting to get out of control - or you simply want to know how to avoid potential credit card pitfalls, you are not alone. Managing credit cards is a problem faced by many who are now drowning in an ocean of debt. Here are some simple strategies that may be of help. - read more
Default and Reposession
Most people would assume that a default under a loan contract means that payments haven't been made but, as you are about to learn, there are other reasons why a lender may have the right to repossession. - read more
How Credit Card Balance Transfers Can Damage Your Credit Rating
Since the banks and finance providers have been castigated for the way they seemingly indiscriminately awarded credit to people who could ill afford it, the chances of being accepted for loans and credit cards have decreased. Concurrently, there is a greater focus on individual's being aware of how credit works and what their financial behaviors means in terms of a credit score and history. - read more
Business Loans: Managing interest rate risks
"I want the protection in the current low interest rate environment but I don't want to be locked in for too long a period" - a commonly heard requirement from business borrowers. - read more
Credit Card Secret Guarantee
Most people use credit cards in some form or another but few truly appreciate one of the special features of credit cards that make using their credit card to insure their purchases. - read more
Credit Cards: Identity Theft and Credit Protection
Credit card fraud and identity theft have become widespread not only on the Internet but offline as well. Learn how to avoid these risks and protect your identity as well as your finances or credit line. - read more
How to freeze the Plastic Debt Dragon in Your Wallet
Are you scared to open your wallet knowing there is a fire snorting dragon lurking in there? You don't need to be afraid of your credit card, you can make it your friend. Here is a plan to choke the dragon and replace it with a friendly furry critter so you can start creating wealth in your life. - read more
7 things you need to know about a Hire Purchase loan
There are seven things you should know before you ever think of getting a Hire Purchase loan. Knowing these things will give you control and power in the loan process. Power and control will will save you money - read more
Personal Loans to help Australians in need: FSO
Small business loans to help Aussie businesses through tough times
Police issue warning about bank scam
ANZ nets solid profit despite wealth management
Millions lack access to basic financial services
Reserve Bank leaves interest rates steady
Big banks not too profitable: RBA
Commonwealth Bank changes ads following ASIC concern
Inflation fall strengthens case for rate cuts
Reserve Bank cuts domestic growth outlook