RBA makes cash rate call

by Julia Corderoy02 Jun 2015
The Reserve Bank of Australia has left the cash rate on hold at 2% at its June board meeting today, after dropping it by 25 basis points last month. 

The decision to hold rates steady didn’t come as a surprise to the market, with economists and analysts unanimously agreeing that the cash rate would remain on hold today, according a Reserve Bank survey conducted by finder.com.au.

Shane Oliver, AMP Capital's head of investment strategy and chief economist, predicted the Reserve Bank would keep rates on hold while the assessed how the May rate cut filtered through the economy.

“Having cut in May, the Reserve Bank will prefer to sit back and see if it’ll be enough.”

Michael Witts, head of treasury at ING Direct said the popular reaction to the federal budget would give the central bank enough confidence to keep the cash rate steady at 2%.

“The budget appears to have gained positive traction and nothing has fundamentally changed in the economy over the past month.”

While Bill Evans, chief economist at Westpac said the Reserve Bank is likely to keep rates on hold for the next few months. The next significant meeting won’t be until the end of the year.

“We have consistently argued that 2% will be ‘the resting place’ for this easing cycle. The Reserve Bank will now take time to assess the sustainability of their current forecast that economic growth in 2016 will exceed 3%... For our part the next significant date will be the November Board meeting.”
 

COMMENTS