RBA Still Has Room to Reduce Interest Rates

Interest article I found regarding RBA's stance on interest rates......

The RBA (Reserve Bank) has indicated that it will consider further rate cuts in its June monetary policy meeting minutes, despite a pick-up in the housing market and other key economic sectors.

While they acknowledge hat house and unit prices have remained ‘relatively flat’ in the months leading up to the June meeting – though ‘still higher than the previous year’ – factors outside of the property market continue to create economic uncertainty.

"There were…signs that the appetite for borrowing in the household sector was picking up, and the housing market generally appeared to be improving, as the effects of the most recent and earlier reductions in the cash rate worked their way through the economy."

Interest rates declined further as a result of the RBA’s May rate cut decision and the exchange rate also depreciated noticeably, though it remained at a high level considering the decline in export prices.

However, the Board says the Australian dollar may fall further as export prices ease and says it has room to cut interest rates again.

“It was possible that the exchange rate would depreciate further over time as the terms of trade declined, which would help to foster a rebalancing of growth in the economy. The board also judged that the inflation outlook as currently assessed might provide some scope for further easing, should that be required to support demand.”

Australian Broker Online

by Mackenzie McCarty | 19 Jun 2013