-Glenn Stevens, RBA Governor
The Reserve Bank of Australia kept the official cash rate on hold, but highlighted that further monetary policy easing is possible in the coming months in order to fuel growth in demand and inflation. The central bank's decision came in contrast to economists' expectations, who called for another interest rate cut after reduction of OCR by 25 basis points in February. With the cash rate being now at 2.25%, it is the lowest level since the 1950s. In the statement accompanying the RBA's decision, Governor Glenn Stevens reiterated the sluggish pace of Australia's economic rebalancing, the stubbornly strong Aussie Dollar, as well as spar capacity in the labour market.
Separately, the Australian Bureau of Statistics reported that the number of Australian home building approvals jumped in January from a month earlier, resuming the uptrend that is being boosted by record-low interest rates. Building approvals surged 7.9% in January, following the 2.8% decline in December. Moreover, Australia's current account deficit shrank more than expected in the December quarter. The gap narrowed a seasonally adjusted 21% to $9.588 billion after a downwardly revised $12.13 billion in the third quarter. The surplus on goods and services increased $2.8 billion in real terms, which would add 0.7 percentage points to growth in the fourth quarter measure of gross domestic product, according to the ABS.
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