Rates to stay put as RBA shows 'relaxed demeanour'

by Adam Smith05 Mar 2012

The Reserve Bank is again expected to leave rates untouched when it meets tomorrow.

The RBA board will meet tomorrow following a surprise rate hold in February. This time, analysts are tipping the Reserve to leave the cash rate at 4.25%, saying the central bank is "relaxed and comfortable".

In its last statement on monetary policy, the RBA board showed an optimistic outlook for economic growth, and indicated conditions would have to "weaken materially" before rates would be cut again. TD Securities economist Annette Beacher told News Ltd the Reserve Bank board appeared at ease with current economic conditions.

"The RBA is now projecting a relaxed and comfortable demeanour," Beacher said.

Westpac, which has been predicting a further two rate cuts in the months ahead, conceded that the RBA was "widely expected" to leave rates on hold in March.

"The bank expects growth to be close to trend over the next couple of years and that inflation will remain consistent with the target over the forecast period. On the global front, the bank highlights recent positives, while citing Europe as the major downside risk to the outlook," the bank said.

In spite of the expectation that the Reserve Bank will not move tomorrow, Westpac has argued that further monetary easing is needed.

"Locally, economic growth is relatively job poor and the high Australian dollar is acting to tighten monetary conditions. This suggests labour market trends will disappoint," the bank said.

Related stories:

Bank hikes could force RBA's hand

'Loss of momentum' won't move RBA


  • by sidbroker 5/03/2012 10:21:08 AM

    Come on RBA drop the bloody rates!!!