February RBA: Rates unchanged

The Reserve Bank of Australia has left their rates unchanged at 3.25% (statement here). We suggested that this was a possibility earlier in the day – and it is the closest thing to a correct rate call that I’ve have made for the last 18 months 😛

Relatively robust domestic demand, combined with commodity prices that just won’t fall sharply, has convinced the RBA that there is now enough stimulus.

They haven’t given up on future rate cuts. “The Board will consider the position again at its next meeting” indicates to me that there is room for cuts if Australian output starts to decline or if commodity prices from their end are really starting to sag.

This will definitely dent expected rate cuts in New Zealand. Before this I would have bagged a 75 cut – now a 50 cut is looking a lot more likely (than it was). I’ll keep an eye on iPredicit to see what is going to happen.

  • Congratulations on your pick, Matt! Robin Hanson says I can trust you now 😛

  • Sadly it wasn’t a pick – I just said it was possible. The thing was it was “the closest” I’ve been to a correct pick on rates for a while.

    Now, if you ask me about my forecasts of retail sales or wage growth – thats something that seems to be running well for me at the moment 🙂

  • Miguel Sanchez

    GDP -0.5%; in one fell swoop, they’re almost as far down the toilet as us. Whoops!

  • Hi Miguel,

    I would note that there was a 1.6% decline in GNE – which was solely the result of a FALL in inventories. Now falling inventories is not usually a sign of a recession – so there is something fishy here …