Flash Notes

RBA Holds But Flags Concern On High AUD

    The Reserve Bank of Australia (RBA) left the overnight cash rate steady at a record low of 2.0%. There were little changes to April’saccompanying statement, with the RBA concluding that “Over the period ahead, new information should allow the Board to assess theoutlook for inflation and whether the improvement in labour market conditions evident last year is continuing. Continued low inflationwould provide scope for easier policy, should that be appropriate to lend support to demand”.

    No Urgent Need To Cut

    The RBA has considerable reluctance to consider cutting rates further and this is understandably so. Domestic growth is solid, andthe unemployment rate appears to be past its peak. Recent GDP data revealed that the Australian economy expanded an annualized3.0% in the December quarter, beating the 2.5% growth rate expected. Global markets have also stabilized, and commodity priceshave lifted. Both oil and iron ore prices