The Reserve Bank of Australia meets today for its monthly meeting
The Reserve Bank of Australia meets today and the likely outcome is no change to official interest rates. Recent indicators such as last weeks weak retail sales figures, the decline in business and consumer confidence in various surveys and the fall in housing finance commitments in December suggests that the previous 0.25 per cent increase in November 1999 and the 0.50 percent rise in February this year are slowing down the economy.
ANZ Bank has interpreted a 5 per cent jump in the number of newspaper job advertisements in February as a sign that the Australian labour market continues to slow in line with a weaker broader economy.
A topic that will be high on today’s RBA meeting agenda will be the Aussie Dollar, which is brushing its lowest level since October 1998. The Aussie recently traded at 60.24 U.S. cents, down from 66.57 U.S cents in January. There has been some speculation that the RBA may raise rates to support the Aussie dollar but the RBA would be mindful that this type of monetary policy requires careful management to avoid job losses and minimal economic growth.
Overnight the Dow tumbled 196 points after US Federal Reserve Chairman Alan Greenspan said the US central bank will keep raising interest rates until the economy slows.
Only time will tell what action the RBA will take in regards to official interest rates but we believe that there will be no movements to official interest rates until the middle of the year. The May RBA meeting will be one worth keeping an eye on.