Cash Rate Remains Unchanged

Posted on July 10th, 2013 · Posted in News

The Reserve Bank of Australia (RBA) has left the official cash rate unchanged from its record low level of 2.75%.  With the central bank getting its wish of a falling Australian dollar, all but one of 13 economists surveyed by AAP expected the rates to hold steady.  The RBA last cut the cash rate in May 2013, when the Australian dollar was still above parity with the greenback.  At the time the RBA said low inflation had allowed it to make the reduction, and cited the high Aussie as one of the reasons why conditions remained tough for business.  But the dollar has since lost more than 10 US cents.

CommSec economist Savanth Sebastian said the RBA would likely wait until June quarter inflation figures are released on July 24 before a likely rate cut in August.  The pull-back in mining investment is occurring faster than expected and non-mining sectors need to be inspired to invest and fill the spare capacity in the economy, he said.  “I think, certainly, the reserve bank would want to see further improvement in terms of stimulatory measures and I think another rate cut in August may just do that for them,” Mr Sebastian said.

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