RBA keeps rate hopes alive

by Adam Smith26 Oct 2011

The RBA has reiterated the possibility of a rate cut while showing cautious optimism in the future of the economy.

In a speech to Citi's 3rd Annual Australian & New Zealand Investment Conference, RBA deputy governor Ric Battellino commented that the outlook for inflation had improved, and that easing inflation could provide scope for a rate cut from the Bank.

"The downward revisions to recent estimates of underlying inflation and the softer global economic outlook have made the outlook for inflation less concerning, providing scope for monetary policy to be supportive of economic activity, if needed," Battellino said.

Battellino pointed to upcoming CPI data, due today from the Australian Bureau of Statistics. He indicated that the data would provide further direction for the Bank ahead of its November board meeting.

While leaving open the possibility of rate cuts, Battellino expressed optimism at the state of the Australian economy. He commented that some sectors of the economy showing signs of life despite global volatility.

"Retail sales have picked up a little, housing loan approvals also seem to be picking up somewhat, most measures of business conditions remain around average levels and the most recent employment data have been more positive after a number of weak months," Battellino remarked.

Battellino also pointed to recent reductions in mortgage interest rates, and said average rates on new loans are now 10-15bps lower than early in the year.

Related stories:

Case for rate cut growing

More banks turn bearish on rates

Rate cuts could be on the table


  • by sidbroker 26/10/2011 4:54:43 PM

    The rate should never have been this high in the first place. The treasurer has indicated the world is possibly heading for another recession and the RBA IS STILL SITTING ON THEIR HANDS.