FNArena Alert: RBA Leaves Rate Unchanged

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By Greg Peel

There was little surprise when the RBA left the target cash rate unchanged this morning. We had a 25 basis point rise in August, and this alone is usually enough to suggest the RBA might wait to gauge the effect. But the August rise also came ahead of the bulk of financial turmoil in US markets and credit markets globally. With the Fed supposedly poised to ease on September 18, the RBA has indicated its intention to watch developments closely before acting again.

To this end, a rate rise was not expected. But recent economic data, while a bit dated, have indicated an Australian economy still powering ahead and restrained by the supply side which is still trying to catch up with demand. As long as there is not another material break down in global credit markets, or clear indications of a sharp slowdown in the US economy, economists are leaning towards a rate rise in November or December.

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