RBA won't rule out further rates cuts

RBA won't rule out further rates cuts
Tuesday June 16, 2009, 1:16 pm


The Reserve Bank has indicated it is prepared to reduce interest rates further to support the economy if necessary.

The minutes from the RBA board's monetary policy meeting two weeks ago show the RBA did not see a pressing case for further action on the official cash rate, which was left unchanged at 3 per cent.

Board members noted that measures in the Federal Budget would provide some solid economic support and that monetary policy had already been adjusted significantly.

But the board also pointed out that global growth was subdued and that if inflation was to fall a great deal further, there would be adequate scope to lower the cash rate.

RBC Capital Markets' senior economist, Su-Lin Ong, says it appears the Reserve Bank has moved to the sidelines for the foreseeable future.

"We are inclined to think 3 per cent may be the low for cash rates in this cycle and that this easing cycle is over," she said.


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