RBA stays on hold in May 2011

In May 2011, the Reserve Bank of Australia let unchanged its interest rate. The statement sounds hawkish.

RBA stays on hold in May 2011
The RBA let the cash rate unchanged in May, at 4.75%. Australia’s interest rate is stable since November 2010.

In the statement, the RBA emphasizes that “national income is growing strongly” despite a still prudent consumer and adverse impact coming from the floods. For the bank, “over the medium term, overall growth is likely to be at trend or higher”.

In this context, inflationary pressures are high in Australia but the “Bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the year ahead”. However, “over the longer term inflation can be expected to increase”.

So even if, the BRA judged that there is no rush to tighten further the monetary policy (currently “mildly restrictive”) in Australia, the Bank clearly has a hawkish bias.

The key point in the close future will be the evolution in total and underlining inflation in Australia. The Bank does not expect to see a sharp rise in prices on the short run. Nothing is less sure, with a downward trend in unemployment and still strong GDP growth.

Market Impacts
Forex: the AUD/USD stays on the downside (i.e. appreciation of the AUD) and RBA’s decision did not accentuate the trend.


Tuesday, May 3rd 2011

World Economic Snapshot
CB 0.25% 1.50% 6.56% 0.1% 0.5% 1% 0.25% 12.25%
GDP 2.3% 2.5% 9.8% 2.5% 1.8% 2.9% 2.4% 4.2%
Price 3.6% 2.7% 5.5% 0.3% 4.5% 3.3% 0.3% 6.1%
UR 9.2% 9.9% - 4.7% 7.7% 7.4% 3.0% 6.0%

Last Articles

Dukascopy, ECN forex broker offers marketplace and highest liquidity for online forex trading.

Photos Libres

All publication on gecodia.com are provided as a service on an "as-is, as-available" basis for informational purposes only. Publications does not constitute an offer to buy or sell or to subscribe to financial instruments. We declines all responsibility for the use that may be made of said information and the consequences that may derive there from. The views and opinions expressed in this document, which are subject to change, are those of GECODIA at the time of publication. For more precision, please consult our Terms and Conditions and our Risks Disclosure.