RBA Remains Steady Again

The Reserve Bank of Australia (RBA) on Tuesday kept interest rates unchanged, as expected, even as speculation mounts that borrowing rates, already at record lows, could head further south.  The central bank kept rates at 2.5 percent, and maintained its rhetoric for a period of stability for rates.

“I think the RBA has concluded that they’ve cut interest rates enough. Rates are not a constraint on the economy growing. Yes, the Australian dollar is still too high but that’s a function of other things. In the meantime, it’s just a matter of waiting for animal spirits to recover in Australia and for growth to pick up,” said Shane Oliver, head of investment strategy & chief economist at AMP Capital Investors.

The decision comes as the so-called “lucky country” appears to be losing its Midas touch, as the economy contends with weak growth, slowing inflation and a rising jobless rate, adding to the argument that intervention from the central bank is coming.


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