Re-balancing Remains RBA's Focus
December 4, 2012 3:50 AM EST
By Rudi Filapek-Vandyck, Editor FNArena
At its final meeting for calendar 2013, the Reserve Bank of Australia (RBA) has sliced off a further 25bp to bring the official cash rate down to 3.00%, as widely expected by (most) economists and commentators.
Key assessments, judging from today's Statement by RBA Governor Glenn Stevens, were the fact that the peak in the mining capex boom is near while inflation is likely to remain contained and early improvements for the global economy are still offset by ongoing uncertainties in the US and in Europe. Nothing we already didn't know.
Stevens' statement also makes a reference to the Australian dollar which remains stronger against most other currencies than would have been expected on the basis of changes in commodity prices and Australia's terms of trade. Again, nothing we didn't already know. Besides, what are Stevens and Co going to do about it?
Probably the most interesting paragraph in today's statement is the following:
"Private consumption spending is expected to grow, but a return to the very strong growth of some years ago is unlikely. Available information suggests that the near-term outlook for non-residential building investment, and investment generally outside the resources sector, remains relatively subdued. Public spending is forecast to be constrained. On the other hand, there are indications of a prospective improvement in dwelling investment, with dwelling prices moving a little higher, rental yields increasing and building approvals having turned up."
And that's why yet another 25bp has gone off the official cash rate. The Australian economy has to re-balance away from resources capex, but the most obvious sector to support this re-balancing is the local building sector and any improvements witnessed to date remain "green shoots" at best. A little help was thus welcome and the RBA has delivered just that.
No indications are given about what the RBA thinks lies most likely ahead. So we can all continue speculating and debating about how many more cuts will be needed to achieve a soft landing in Australia next year.
For the full statement as released today via the RBA website: CLICK HERE.
The Bank of Queensland ((BOQ)) has already announced it will only pass on 20bp to its mortgage holders.
Most Popular Slideshows
- Still The World Champions: Team USA Overpowers Serbia, 129-92 To Win 2014 FIBA World Cup [PHOTOS]
- Pope Francis: World War III Has Started On Piecemeal
- After Win Over Maidana, Mayweather Says He Is Prepared To Negotiate A Fight With Pacquiao
- From Fat To Fit: Celebrities Who Were Overweight Before They Became The Beauties That They Are
Join the Conversation
- Australian Stock Market Report – Afternoon September 15, 2014
- Australian Stock Market Report – Midday September 16, 2014
- Iron Age For Australia Ends As Price Of Key Steelmaking Ingredient Dips Below $83/Tonne
- Australian Stock Market Report – Morning September 15, 2014
- Australian Stock Market Report – Midday September 15, 2014
- iPhone 6 vs iPhone 6 Plus vs Galaxy S5 and HTC One M8: Performance, CPU and Health
- Google Release Roundup: Nexus 5 2014, Nexus 6, Nexus 8 and Android L Killer Features
- Samsung Attacks iPhone 6 Plus Through New Galaxy Note 4 Commercial: Apple Claims Imitating Galaxy Note Phablets
- iPhone 6 And IPhone 6 Plus Sold Out, New Stocks To Arrive In October
- Pregnant Kate Middleton May Call Off Malta Trip Due To Sickness: Royal Couple Will Move To Anmer Hall Residence
- Moto G (Gen 2) vs. Xiaomi Redmi 1S—Specifications, Features And Price Showdown
- Nexus 6, 8 Release Dates Imminent as Moto X Pre-Order Begins & Nexus 7 Deals Ramp Up