RBA keeps rates at 2% but it comes with a subtle change of tone

Construction

The RBA has kept interest rates on hold at 2 per cent for the tenth month in a row, and their language indicated the slightest of shifts towards a position of further easing this year.

In their meeting for March, the Reserve Bank released a very similar statement to the previous month but the tone was ever-so-slightly more in favour of possibly cutting rates again this year.

The nation’s central bank remains downbeat on the global economy, is conscious of volatile financial markets, forecasts inflation to stay low and sees property prices as moderating.

The RBA is keen to wait and see how the Australian economy is affected by financial turbulence and how the unemployment rate fares before making future decisions on rates.

In its statement, the RBA went from last month saying continued low inflation ‘may’ lead to future interest rate cuts to ‘would’ lead to future interest rate cuts, should they be appropriate.

AMP Capital’s Shane Oliver said in Property Observer that his view remains that the RBA will cut interest rates again this year due to the global economic risks, poor commodity prices, falling housing construction, sluggish economic growth in Australia, a possible rising Australian dollar and continued low inflation.

 Whether the rates are cut again is debatable, but there certainly seems to be no signs of any rate hikes on the horizon, and Australia’s period of low interest rates looks set to well and truly continue.

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