RBA keeps rates steady amid uncertainty on future moves

Interest rates have remained unchanged for the 15th policy meeting in a row. 

Comments made by the RBA during this month’s meeting again emphasised that the current rate levels were right for fostering sustainable growth.

Currently, it’s commodity prices that are moving and shaking the economy, RBA governor Glenn Stevens said that key commodity prices had declined significantly thanks to uneven supply and demand levels. 

If you’ve been living under a rock in Australia recently you might have missed that iron ore prices have declined sharply from their big boom-time highs, and that has obviously had a big effect on fiscal accounts. Iron ore is Australia’s biggest export. 

And even more recently, we’ve seen falls in oil prices that we haven’t seen for some time, which has thrown the cat amongst the world financial market pigeons as well. 

There are differing opinions emerging on what moves should be made regarding interest rates in the near term, the OECD recently advised Australia to lift rates next year, and at home there is speculation mounting that rates might actually be cut. 

The Australian dollar has dropped to around US84.80c, and Mr Stevens again outlined his desire to see it fall further to allow a balanced growth in the economy. 

There was certainly no expectation of any rate changes this time around, and it marks the entire calendar year that rates have remained unchanged. It’s been 10 years since that happened. 

As mentioned, speculation is mounting that if the housing market cools it will allow the RBA to ease policy next year if unemployment stays up and the current mood of global uncertainty continues.


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