The Reserve Bank has
adopted a ‘wait and see approach‘, leaving interest rates on hold at its first
board meeting of the year.
The decision to leave the
official cash rate at three per cent takes into account weaker-than-expected
building approvals for December, the continuing fall in job advertisements,
while inflation remained subdued in January.
The TD Securities –
Melbourne Institute Monthly Inflation Gauge rose by 0.3 per cent in January.
Contributing to the
overall change were price rises for utilities, urban transport fares and
education, mainly due to seasonal factors. These were offset by falls in
holiday travel and accommodation, clothing and footwear, and furniture and
furnishings. While the price of fruit
and vegetables only rose by 1.2 per cent last month.
Meantime, the strong Australian dollar has allowed
numerous goods and services to be imported at discount prices, although this
impact is likely to fade as the year unfolds and the Australian dollar
stabilises.
The cash rate has been lowered by 125 basis points
over the past 12 months. It’s thought more time is needed to measure the effect
of this monetary easing, which will be more clear come the March meeting.
For the RBA’s full decision visit
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