RBA left the Cash Rate UNCHANGED at 4.25%
08 February 2012
In a move that surprised the markets, the RBA left the Cash Rate UNCHANGED at 4.25%. The interest rate markets were fully expecting a 0.25% rate cut, so the AUD has spiked higher in response.
• Judged policy was appropriate for the moment
• Says rates for borrowers close to medium term average
• Commodity prices remain at quite high levels
• AUD somewhat higher than it had previously forecast
• Chinese growth moderated as intended, most indicators quite robust in H2
• European risk still skewed to downside
• If demand weakens, inflation would provide room for rate cut
• European economic conditions weakened since last meeting
• Financial markets remain skittish but has improved since early December
• Rise in AUD reflects decline in EUR
• Housing prices have shown signs of stabilising
• Expects growth to be close to trend, and inflation close to target
• Term funding markets have reopened for Australian banks