Reserve Bank leaves cash rate unchanged
The Reserve Bank announced today it would leave the cash rate unchanged at 4.75 percent. Glenn Stevens, Governor of the Board of the Reserve Bank closely followed his statements from the May announcement, saying the mildly restrictive monetary policy remained appropriate in response to an expanding global economy.
Asia is growing strongly, despite a big fall in Japanese production following the recent earthquake and nuclear disaster. Commodity prices have fallen a little, but remain at high levels, the Board reported, leading many other countries to tighten their monetary policies.
Stevens reported Australia’s terms of trade are at very high levels and national income is growing strongly, despite reduced export outputs following summer’s floods and cyclones. While the effects of extreme weather and rising utility prices are pushing up inflation, this has to some extent been offset by reduced prices for traded goods. “The exchange rate remains, in real effective terms, close to its highest level in several decades. If sustained, this could be expected to exert continued restraint on the traded sector.”
The Governor gave no indication of future monetary policy, but most economists are tipping a rate rise in August.
Got something to say? Join the export forum here at DynamicExport.com.au.
