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Interest Rate Announcement for June 2015

By Rebecca Zhang

The Reserve Bank of Australia has left the cash rate on hold again at a record-low of 2.0%. In its Statement this month, the RBA stated that:

Having eased monetary policy last month, the Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Information on economic and financial conditions to be received over the period ahead will inform the Board’s assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.”

Real Estate Business (reb) stated that the board will probably want several months to assess the impact of its earlier decisions. Low inflation and the high Australian dollar are reasons why the Reserve Bank might further reduce rates in 2015. However, one reason why it might not reduce rates would be to avoid inflating property prices in Sydney and Melbourne.

The board will need to investigate the impact this (i.e. the current interest rate decision) will have on growth, unemployment and investor behaviour before they decide to make another rate cut.

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