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Does RBA’s recent rate decision seem familiar?

On Aug 04 2011


You do get the feeling that nothing much has changed by reading the July Reserve Bank interest rate ...

You do get the feeling that nothing much has changed by reading the July Reserve Bank interest rate decision.

 

The Reserve Bank Board's July meeting left the cash rate at 4.75 per cent for the eighth straight month.


Economists are somewhat disappointed that the Reserve Bank didn't acknowledge softer economic indicators over the past month.


The world may have changed. A new era of consumer conservatism may be here to stay, causing businesses to keep prices low, thus restraining inflation. But don't expect the Reserve Bank to declare that times have changed.


The good news is that there is a nice balance of forces at work at present. Asia is strong, US is soft and Europe is mixed.


In Australia, mining and engineering are strong, consumer spending is soft and housing activity is mixed. Wage growth remains benign, reflecting mixed conditions across sectors.


What next? It is predicted that the Reserve Bank is likely to wait until August before seriously considering any change in rate settings.


Edited from Source: Craig James, Chief Economist, CommSec

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