 Rates on hold for the time being
The Reserve Bank of Australia is waiting for concrete evidence that the economy is looking up before moving interest rates.
The minutes of the last RBA meeting showed that the board is considering a “less expansionary policy stance'” if the economy shows signs of being stronger than expected.
However, the RBA has kept the official cash rate on hold at 3 per cent, a 49-year low, for many months now. ``At the previous meeting, members had agreed that if the economy continued to evolve as in the latest forecasts, the bank would in due course need to adopt a less expansionary policy stance,'' the minutes said.
``The information at this meeting suggested that economic conditions were indeed evolving broadly in that way. Nonetheless, some uncertainty remained about the outlook both abroad and at home.
``The meeting concluded that the balance was best struck by leaving the cash rate unchanged for the time being, pending further evaluation of incoming information at future meetings.''
The financial markets have reduced the prospect of an October rate rise from 45 per cent last week to just 17 per cent, after weaker retail sales, jobs and lending finance and while the Australian dollar remains near the highest point for a year. However, most economists are still tipping a small rate rise before the end of the year.
Immediately after the minutes were published the Australian dollar rose to about US86.30c, and despite then falling again this could be viewed as a positive sign.
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