The Reserve Bank of Australia (RBA) left the official cash rate unchanged at 2.0% last week, as was widely expected, with the post-meeting statement almost a virtual carbon copy of last month’s. The RBA said volatility in financial markets had abated “somewhat” for the moment and the US Federal Reserve was expected to start increasing interest rates over the period ahead (they meet this week).
The RBA is waiting and watching the upcoming data, choosing to maintain a view that moderate expansion in the economy will continue, probably a result of their renewed confidence following October’s surprising strength in employment.
If you cast your mind back to this time last year, the RBA Governor was interviewed by the Financial Review where he presented a neutral to mildly hawkish view on monetary policy, then, at their first Board meeting of 2015, the RBA cut the cash rate. I’m not sure if history will repeat itself this time. We’ll know for sure in February when the RBA next meets.
The Rural Bank Treasury Team wishes you compliments of the Season and we look forward to being back with the next edition of the Weekly Economic Commentary in early January 2016.