RBA Decides to leave cash rate unchanged at 3.25%

At it's meeting today the Reserve Bank decided to leave the official cash rate unchanged. There was much speculation that the bank would reduce rates again as it did in October. It highlighted some growth signals from previous easing of monetary policy are now starting to filter through the economy.

Some of their comments in their statement were:

Over the past year, monetary policy has become more accommodative. Interest rates for borrowers have declined to be clearly below their medium-term averages and savers are facing increased incentives to look for assets with higher returns. While the impact of these changes takes some time to work through the economy, there are signs of easier conditions starting to have some of the expected effects. Business demand for external funding has increased this year, the housing market has strengthened and share prices have risen in line with markets overseas. The exchange rate, though, remains higher than might have been expected, given the observed decline in export prices and the weaker global outlook.

Further effects of actions already taken to ease monetary policy can be expected over time. The Board will continue to monitor those effects, together with information about the various other factors affecting the outlook for growth and inflation. At today's meeting, with prices data slightly higher than expected and recent information on the world economy slightly more positive, the Board judged that the stance of monetary policy was appropriate for the time being.

So I guess for the time being a wait and see approach is being adopted by the RBA.

As always, please contact the office on 07 3376 1005 if you have any queries or would like a review of your current finances. Until next time.....