April rate cut uncertain
18/03/09 12:21 PM
Speculation
that the RBA will cut rates by 50bps in April has
been dampened with the release of the minutes from
the bank's March meeting.
The minutes which explained the decision to leave the official cash rate on hold, revealed that the board left rates unchanged in order to monitor how the economy reacted to its most recent cuts.
"Early indications were that the monetary and fiscal stimulus that had been applied to the economy was having an expansionary effect, but the size of this remained unclear and it would take some time for the full impact to come through," the minutes stated.
The minutes which explained the decision to leave the official cash rate on hold, revealed that the board left rates unchanged in order to monitor how the economy reacted to its most recent cuts.
"Early indications were that the monetary and fiscal stimulus that had been applied to the economy was having an expansionary effect, but the size of this remained unclear and it would take some time for the full impact to come through," the minutes stated.
As a result
the board decided the best course of action was to
leave rates at 3.25%.
More significantly however, the minutes also revealed that the central bank had anticipated the weakening of the economy and rising in unemployment when it made its March decision, and had flagged the importance of leaving flexibility in its policy for future meetings.
This has shaken investor rate cut expectations for the 7 April board meeting.
Following the release of the minutes, investors pared back their expectations of a 50bps cut from 86% to 82% according to the AFR.
http://www.brokernews.com.au/news/breaking-news/34400/details.aspx
More significantly however, the minutes also revealed that the central bank had anticipated the weakening of the economy and rising in unemployment when it made its March decision, and had flagged the importance of leaving flexibility in its policy for future meetings.
This has shaken investor rate cut expectations for the 7 April board meeting.
Following the release of the minutes, investors pared back their expectations of a 50bps cut from 86% to 82% according to the AFR.
http://www.brokernews.com.au/news/breaking-news/34400/details.aspx