MARCH RBA UPDATE
RBA Leaves Rates on Hold
At it's March meeting the board again decided to leave rates on hold. They commented that sentiment in financial markets is much improved compared with the middle of last year:
"Global growth is forecast to be a little below average for a time, but the downside risks appear to have lessened over recent months. The United States is experiencing a moderate expansion and financial strains in Europe are considerably reduced compared with the situation through much of last year. Growth in China has stabilised at a fairly robust pace."
"In Australia, most indicators available for this meeting suggest that growth was close to trend over 2012, led by very large increases in capital spending in the resources sector, while some other sectors experienced weaker conditions. Looking ahead, the peak in resource investment is approaching. As it does, there will be more scope for some other areas of demand to strengthen."
Glenn Stevens also commented that inflation is under control and in the target band for the RBA.
"Inflation is consistent with the medium-term target, with both headline CPI and underlying measures at around 2¼ per cent on the latest reading. Looking ahead, with the labour market softening somewhat and unemployment edging higher, conditions are working to contain pressure on labour costs, as was confirmed in the most recent data."
"The Board's view is that with inflation likely to be consistent with the target, and with growth likely to be a little below trend over the coming year, an accommodative stance of monetary policy is appropriate."
Looks like they are waiting to see the impact of the cuts that were made to the cash rate last year and what impact that has on the economy. So they are on hold for the moment, and we may have hit the bottom with a marked increase in consumer sentiment this year, particularly in the property market.
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