"Regarding the communication of this decision, members agreed that the bank should neither close off the possibility of reducing rates further, nor signal an imminent intention to reduce rates further"
- RBA minutes
According to the minutes of the Reserve Bank of Australia policy meeting August 6, the central bank left the door open for more rate cuts and it would continue to watch closely economic data to evaluate the correct level of interest rates. The RBA cut its benchmark cash rate by 25 basis points to 2.50% at the recent policy meeting, citing slowing economic growth and low inflation as main reasons behind the move. Since late 2011 interest rates have been cut eight times as the central bank has been trying to rebalance the economy from mining regions, where the investment boom is waning, towards industries including residential construction. The RBA projected earlier this month that the nation's economy would expand 2.25% in 2013 compared to the expectations of the 3% growth at the beginning of the year.
The minutes also indicated that despite weakening to the lowest level in three years, the Australian Dollar remained at record high levels, reinforcing the view for a cut in August. The currency average since it was floated in December 1983 is 75.5 U.S. cents. The catalyst for the Aussie Dollar fall in recent months has been speculation that the Fed could start tapering its $85 billion-a-month stimulus plan, which has impelled the U.S. Dollar's strengthening versus major counterparts.
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