The Reserve Bank of Australia just announced the Cash Rate Target is cut by 0.25% to a record low of 1.25%. This was outcome was widely expected and is the first change in the Cash Rate since August 2016.
The pertinent points in the RBA’s accompanying statement were:
- RBA’s cash rate target lowered by 0.25% to 1.25%
- Needs faster progress in reducing unemployment
- Took decision to support employment growth
- Monitor developments in labour markets closely
- Took decision to provide greater confidence on inflation
- Outlook for global economy remains reasonable
- To adjust policy to support sustainable growth
- Downside risks from trade disputes have increased
- Rate cut will help make further inroads into spare capacity
- AUD$ at low end of narrow range of recent times
- Central scenario for underlying inflation 1.75% in 2019, and 2% in 2020
- Economy can sustain lower rate of unemployment
- Central scenario for domestic economy to grow around 2.75% in 2019, 2020
- Conditions remain soft in housing market
- Main domestic uncertainty continues to be household consumption
- Some pick-up in growth in household income expected, should support consumption
- Little further inroads in spare capacity in labour market of late
The AUD is a slightly higher in immediate response.
Current indicative levels are:
AUD-USD 0.6975 / 0.7000
AUD-EUR 0.6195 / 0.6220
AUD-GBP 0.5505 / 0.5530
AUD-JPY 75.30 / 75.55
AUD-NZD 1.0590 / 1.0615
The next RBA Cash Rate policy meeting will be held on Tuesday 2nd July 2019.
Below is the link to the RBA’s media release:
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