As expected, no change to interest rates at yesterday’s Reserve Bank board meeting, but the central bank has advanced from 2011, to sometime this year, if the economy keeps strengthening and inflation starts picking up faster than expected.
As usual the post meeting statement contained key changes in words or phrases.
Here are the key last paragraphs from the post meeting statements from RBA Governor, Glenn Stevens.
The key words or phrases have been emphasised by Air.
The last rate rise was at the May board meeting and looking at the paragraphs we can see the way that the central bank became more relaxed around June through August, but that change for September is a signal that the bank now has its hands on the lever to push rates up should the flow of data from the economy (retail sales, trade, employment) continue to be bullish.
September 7: No change.
The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade. With growth in the near term likely to be close to trend, inflation close to target and with the global outlook remaining somewhat uncertain, the Board judged this setting of monetary policy to be appropriate for the time being.
August 3: No change
The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade. With growth likely to be close to trend, inflation close to target and the global outlook remaining somewhat uncertain, the Board judged this setting of monetary policy to be appropriate.
July 6: No change
The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade. Pending further information about international and local conditions for demand and prices, the Board views this setting of monetary policy as appropriate.
June 1: No change
Consistent with that outlook, and as a result of actions at previous meetings, interest rates to borrowers are around their average levels of the past decade, which is a significant adjustment from the very expansionary settings reached a year ago. Taking all the available information into account, the Board views this setting of monetary policy as appropriate for the near term.
May 4: (Cash Rate up 0.25% to the current 4.50%):
The Board will continue to assess prospects for demand and inflation, and set monetary policy as needed to achieve an average inflation rate of 2–3 per cent over time.
I’m afraid that we are now going to get the ‘rate rise looms’ type of breathless reporting until either there is a rise or the flow of data weakens.
