August 2012

Welcome to our August newsletter

Earlier this month, the Reserve Bank of Australia (RBA) chose to leave the official cash rate on hold at 3.50 per cent, taking a ‘wait and see’ approach to rates, as many economists predicted. While the RBA appears to be erring on the side of caution, the decision to keep rates on hold can be seen as an early indicator of a stabilising economy especially for retail sales and house prices. Reserve Bank governor Glenn Stevens said inflation was expected to be consistent with the Bank’s target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the Bank’s stance on monetary policy remained appropriate. “In Australia, most indicators suggest growth close to trend overall,” Mr Stevens said. “Labour market data show moderate employment growth, even with job shedding in some industries, and the rate of unemployment has thus far remained low.”
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