The RBA left the cash rate at 2.00% at its March 2016 board meeting earlier today. This makes it the ninth meeting in a row where the official cash rate has not changed. Economists were not expecting any change and cash markets had factored in only a slim chance of a March cut, with the market pricing implying a much higher chance of a rate cut in coming months.
The Bank’s statement repeated a few things such as the reference to the global economy continuing to grow more slowly than earlier expected and how inflation was low but it was expected to be “close to target”.
The Bank noted how several advanced economies (US, UK) had improved growth rates over the last year and that China’s growth rate “continues to moderate”. It also noted that borrowing costs for high-quality borrowers are “very low” and monetary policy is “remarkably accommodative” however, “funding conditions for emerging market sovereigns and lesser-rated corporates have tightened.”
Some parts of the statement were almost positive in their tone; “the expansion in the non-mining parts of the economy strengthened during 2015”. The banks said that although mining investment contracted, improved labour market conditions and a pick-up in the pace of lending to businesses was noted.
All the same, AMP Capital’s Shane Oliver said, “I’ll stick to my view that there will be another rate cut out there from the RBA, probably around May.”
Full text of the statement is available at http://www.rba.gov.au/media-releases/2016/mr-16-04.html