RBA: Australia's central bank keeps interest rates on hold
Australia’s Reserve Bank (RBA) has decided to hold interest rates in its April decision. A widely expected move.
The RBA decided to leave the cash rate unchanged at 1.5%, where it has been since mid-2016.
The central bank showed no indication of dovishness in its April policy meeting and no urgency.
'The Australian labour market remains strong,' said RBA Governor Philip Lowe in the statement. 'urther progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual.' Lowe states.
The announcement comes ahead of the release of the country’s annual budget on Tuesday night. The budget is expected, by some, to be filled with tax breaks and infrastructure spending, stimulus which analysts say in turn might lessen the need for future rate cuts.
Governor Lowe said, the central bank board would monitor developments and set monetary policy to “support sustainable growth."
IG market analyst Kyle Rodda says the decision was unlike New Zealand's central bank's shift in tone last week. The RBNZ stated last week, an unexpected shift in tone, indicating a future interest rate cut.
'The RBA effectively maintained their line on the Australian economy – although it did try to highlight some of the international headwinds the economy faces. One would imagine that they’d the RBA would be pretty keen not rock the boat before tonight’s budget.' Mr. Rodda said.
Australian dollar price
The Aussie dollar traded erratically in the moments following the release,
AUD/USD bounced to $0.7085 with support at $0.700-05
Markets reacted aggressively, pricing in two quarter-point easing in its 1.75% cash rate.
'It’s [The Australian dollar] effectively faded lower now, despite AGB yields ticking higher on some expanded commentary by the RBA on the inflation outlook. The ASX traded just as it had prior to the release.' Mr. Rodda said.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Live prices on most popular markets