We cross the Tasman this morning and note that the Reserve Bank of Australia has left its cash rate unchanged at 4.75%. The statement announcing the decision contained few surprises – there were plenty of echoes from last month’s statement.
RBA officials seem content to sit on the policy sidelines while there is acute uncertainty in financial markets, and while the impact of these events on the global economy is unclear. The cash rate now has been unchanged for nine straight Board meetings.
The minutes from the August Board meeting, though, indicated that officials came perilously close to lifting the cash rate last month. Yes, lifting the cash rate. This is because officials remain concerned about the medium term inflation outlook, something they made crystal-clear in yesterday’s commentary.
- JP Morgan
