The Reserve Bank of Australia leaves interest rate unchanged at 4.75% for the sixth straight meeting
The Reserve Bank of Australia issued this month its decision about the benchmark interest rates, where the Bank decided to leave interest rate steady for the sixth consecutive month at the highest level of 4.75% as the Bank aims to support the economy to exit from its recession phase after the first quarter contraction.
Australian monetary policy makers, led by the governor of the Reserve bank of Australia Mr. Glenn Stevens, kept the interest rate unchanged at 4.75% during the month of June to meet analysts' expectations, while the bank sees the global expansion led by strong Asia growth.
On the other hand, the Reserve Bank of Australia noted that higher commodity price is the main reason behind fueling inflation rates, also the Bank said that the RBA private investment is picking up, mainly in resources.
The Reserve Bank of Australian sees that according to the financial conditions in Australia there may be a need to raise borrowing costs by 25 basis points in the 2nd half to contain inflation rates, also the Bank has warned that higher consumption will face with capacity constraints such as skill shortages affected by mining investment that the government estimates will reach A$76 billion ($82 billion) next fiscal year.
The global economy is continuing its expansion, led by very strong growth in the Asian region. The recent disaster in Japan is having a major impact on Japanese production and some effects on production of manufactured products. Commodity prices, including oil prices, have generally continued to rise over recent months, pushing up measures of consumer price inflation in many countries.
Meanwhile, consumer price growth accelerated to 1.6% last quarter, the fastest pace since 2006, as companies including BHP, the world’s biggest mining company, expand output.
On the other hand, the Australian economy has record the first contraction during the first quarter of 2011. The economy fell 1.2%, the most in two years, more than expected as the nation's exports (the main engine for GDP) dropped on the back of the natural disaster that hit the nation and hurt mining.
At the meantime, the economy still gives some optimism signs as the exports of iron ore and coal to China and other Asian countries surged, providing clues that economic recovery will rebound in the upcoming period, adding speculations the Reserve Bank of Australia will boost the rates next quarter.
Moreover, the RBA indicated that the global economy is expanding, while the financial conditions in the global economy are an accommodative, whereas global expansion led by strong Asian growth.
Yet, the government in Australia is still introducing more stimulus to support economic recovery to return to its normal levels in the second quarter, while global investors increase their confidence for the Australian economy, also the overseas demand for Australian outputs has increased in the current period.
The Australian dollar has dropped against its all major counterparts, while it declined sharply versus the greenback, recorded the lowest level at 1.0683, and it dropped against the yen to record a low of 85.76.
No comments:
Post a Comment