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Interest Rate Announcement

Stamford Capital
The Reserve Bank Board met on Tuesday 1 March and kept official interest rates on hold at 2%.

 

·         Business and consumer confidence Domestic economic data released in February showed the Australian economy is relatively stable. Business and consumer confidence surveys were modestly softer, unemployment rose from 5.8% to 6%, with many analysts sighting statistical anomalies as the cause, as demand for labour remains healthy. Inflation remains low and building approvals stand at over 230,000 and at cyclical highs, however business investment intentions remain disappointing.

·         Falling oil price The fall in the oil price over the past year has been a topic of discussion, mainly around whether the fall is reflecting weak global growth. In reality, demand for oil continues to grow, however supply has also been growing, keeping the supply demand dynamic out of balance.

·         Australian dollar The Australian Dollar has appreciated some 4% from US69 cents in late January to over US72 cents currently. Macquarie’s view is that any further appreciation may be cause for the RBA to cut rates in May and possibly again in August, taking the official interest rate to 1.5% to assist the ongoing re-balancing of our economy.

 

The next RBA board meeting will be held on Tuesday 5 April.
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