- Glenn Stevens, RBA Governor
The Reserve Bank of Australia signalled further interest rates cuts may be required to help rebalance the Australian economy that is struggling to grow. Minutes from the RBA's April board meeting showed the central bank is keeping the door open for a further interest rate cut after surprising markets twice by maintaining the official cash rate steady at 2.25%. The central bank justified its decision to keep rates on hold in April as it wanted to assess more economic data, including inflation trends, before taking further monetary decision. RBA members agreed that the outlook for the economy remained subdued, especially given that the drop in mining investment is yet to bottom out, which would signal that further easing will be required. According to the RBA, one of the keys to underpinning the investment-drained economy is a lower exchange rate, acknowledging in the minutes that further declines in the Australian Dollar are likely, which would help rebalance growth. RBA governor Glenn Stevens reiterated that further rate cuts remained on the table, as the inflation outlook was expected to stay benign.
In February the RBA lowered the cash rate to all-time low 2.25% from 2.5%, where it had been held for over a year. While the central bank has not cut interest rates since February, there are growing expectations that at least one more rate cut is coming.
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