RBA holds interest rates

This article was last updated on April 16, 2022

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The Reserve Bank of Australia decides to keep interest rates on hold for the second month weighting its options against the improving global economy and the diminishing economic conditions at home.

Anticipated as highly unexpected, the RBA has announced to keep its cash rate the same as the previous month, which is 4.25%.

Stephen Walter, an economist at JP Morgan, said that RBA will reduce the rate further only if the conditions get worse from here. He said, “They say policy is appropriate for now. There is no urgency to do anything”.

RBA had previously made back-to-back cuts in the last months of 2011 in order to incorporate the falling economic terms globally. However, it kept the cash rate stagnant in February after which the general perception of all analysts was that the Reserve Bank will respond to the interest rate cut in the next month. However, RBA has surprised the entire economy which was anticipating an interest rate cut. The reason for not further slashing the interest rate is that the global economy is picking up once again and there is no further need for cuts until now.

The announcement was made by the governor of RBA Glenn Stevens on Tuesday. He said, “With growth expected to be close to trend and inflation close to target, the Board judged that the setting of monetary policy remained appropriate for the moment. Should demand conditions weaken materially; the inflation outlook would provide scope for easier monetary policy.”

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