FNArena Alert: No RBA Rate Change

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By Greg Peel

No one was anticipating a rate change this month and so the RBA failed to surprise when it stuck with 6.25% this morning.

It’s a little bit early yet, but economists are definitely on a rate hike watch. The RBA continues to warn of inflationary risks.

Recent economic data suggest the Australian economy is picking up some momentum, yet inflation indicators remain benign. How long can this continue? The RBA is still waiting for inflation to appear in wages and input costs. The  recent ANZ job ads survey pointed to another fall in unemployment, which we will find out about tomorrow, and commodity prices continue their upward trends. At some point, these factors must flow into prices, or so Economics 101 suggests.

The RBA does not issue an accompanying explanation when it makes no change.

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