The RBA Board earlier today announced there would be no change to the cash rate which remains at 2.0 per cent.
The RBA Governor’s (Glenn Stevens) media release mirrored the previous months when the board met in February. It reiterated uncertainty around financial markets and the global economic outlook, in particular China’s slowing growth, which is reflected in the decision to leave the cash rate on hold and monetary policy relaxed. In essence the RBA is sitting on it’s hands until further local key economic data is released, which either supports or contrasts with emerging (however mild) positive signs in our local economy.
Again there is a hint of further reduction in the cash rate to boost demand if required:-
‘Over the period ahead, new information should allow the Board to judge whether the improvement in labour market conditions is continuing and whether the recent financial turbulence portends weaker global and domestic demand. Continued low inflation would provide scope for easier policy, should that be appropriate to lend support to demand.’
Refer attached link for the full media release:- http://www.rba.gov.au/media-releases/2016/mr-16-04.html
On the lender front, there has been some downward movement in 1 – 3 year fixed rates by some of the major lenders over the past week. We will have to wait and see whether their treasury departments are forecasting correct.
Linda Hamilton, Partner, Paris Financial Lending & Finance