- RBA meeting minutes
The Reserve Bank of Australia signalled another interest rate cut might be needed in the foreseeable future, but highlighted that the pause this month was appropriate amid uncertainty about households' behaviour in a very low interest rate environment. Minutes of March 3 meeting, when the central bank surprised markets by keeping rates unchanged, showed that policy makers decided to allow some time for the nation's economy to adjust to rate cuts made earlier and assess the impact of these changes. The RBA maintained the cash rate at a record low 2.25%, following a cut in February, the first rate change in a year and a half. The RBA cited a weaker outlook for the labour market than previously estimated, and said that output growth was also likely to be below trend for longer than expected, with the nation's economy still adjusting to lower prices and levels of investment in the resource sector. Debt markets estimate a one-in-three chance of a 25 basis point reduction next month and are fully priced for a move by June.
As usual, the RBA reiterated it would be happy to see the Australian Dollar weakening further, highlighting it stayed above most estimates of fundamental value, especially given the sharp drops in key commodity prices. A lower local currency would help achieve sustained and balanced growth in the economy.
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