FYI | Jun 05 2012
By Rudi Filapek-Vandyck, Editor FNArena
It had been a long time since the board at the Reserve Bank of Australia met for an interest rate decision with market projections on the outcome spread over three different options: no change, a cut by 25bp and a larger cut by 50bp.
As it was, the board "judged that, with modest domestic growth and a weaker and more uncertain international environment, the outlook for inflation afforded scope for a more accommodative stance of monetary policy." But there was no panic and neither, it appears, did the RBA board feel there was need for another big boost to the domestic economy.
I could possibly write another three paragraphs, but what would be the use of it? 25 basis points it is.
Next question: how much will the banks pass on?
Note today's RBA statement contains the following remark about the longer term inflation outlook in Australia: "maintaining low inflation over the longer term will require growth in domestic costs to slow as the effects of the earlier high exchange rate wane".
To read the full statement, click HERE
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