Tuesday 6 October 2015

Reserve Bank of Australia left the cash rate unchanged at 2%


It happened what was expected. Reserve Bank of Australia left the cash rate unchanged at 2% on the meeting today.
The institution pointed the weakening of some economies, and in particular - China, which is a major trading partner, but adding that although the increase in the gross domestic product of Australia is below long-term averages, it is accompanied by stronger employment growth and stable levels of unemployment.

Overall, the economy is likely to be operatingwith a degree of spare capacity for some time yet, with domestic inflationarypressures contained. Inflation is thus forecast to remain consistent with thetarget over the next one to two years, even with a lower exchange rate.
The purpose of the regulator is facilitated by the depreciation of the local currency, the Australian dollar fell by nearly 9% in the third quarter. This movement is balancing the lower prices of key export commodities.Markets, however, still believe there is a 30% chance for a new reduction of interest rates in November, the decision will most likely be affected by the slowdown of the Chinese expansion.

The data on the trade balance, published today, is highlighting the problems of the export sector. The deficit increased to 3.10 billion AUD in August compared to the revised to 2.79 billion previous month. Exports registered zero change, while imports increased by 1%.

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