RBA stirs further rate cut hopes

The Governor of the Reserve Bank, Ian Macfarlane, gave a clear indication of the Bank's monetary policy thinking yesterday when he indicated that Australia's inflation rate, currently at 1.7% one of the lowest in the industrialise world, would stay low. At the same time he indicated that growth could increase to 4.5% or higher without threatening the RBA's inflation target range of 2-3%.

With growth currently lagging and insufficient to reduce unemployment, that leaves considerable scope for faster growth, and the possibility of yet another rate cut.

Whether a further cut will eventuate is still in the wait and see basket. The last five cuts have yet to have their desired effect, and are indicating that it is not enough to use monetary policy as the sole lever for regulating growth.

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