RBA Shifts to Neutral Stance after Rate Cut

Australia’s central bank damped expectations of further interest rate cuts after reducing its benchmark to a record low, sending the local dollar higher.

Governor Glenn Stevens cut the overnight cash-rate target by a quarter percentage point to 2.5 percent and said the Reserve Bank of Australia’s board “has previously noted that the inflation outlook could provide some scope to ease policy further.” That contrasted with last month’s view the outlook for prices “may provide some scope for further easing.”

“The RBA sounded pretty neutral,” said Alvin Pontoh, Singapore-based strategist at TD Securites. “There’s no hint here that they are in any position to follow this cut with another cut next month, so I take it as a signal they’re happy to keep rates on hold for the near term.”


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