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RBA Decided to Put Interest Rates on Hold This March

March 3, 2015

As per the statement by Glenn Stevens, Governor of Monetary Policy Decision, “At its meeting today, the Board decided to leave the cash rate unchanged at 2.25 per cent.

Opposite to the survey made by all major economists, RBA decided to put the rate stable to 2.25 percent this month. All the observers were expecting the global economy growth the same as in last year.

From the past year, commodity prices have fallen down, in some cases, along with oil prices too. Although, financial conditions are globally quite accommodative, but with long-term borrowing rates for several major sovereigns at all-time lows over recent months. As the risks are widened, the overall financing costs for creditworthy borrowers remain remarkably low.

The available information suggests that the growth is continuing at a below-trend pace, with domestic demand growth overall quite weak due to which the unemployment rate has gradually moved higher over the past year.

There is a moderate growth in the credit that leads to stronger growth in lending to investors in housing assets. Housing prices continues to rise in Sydney over past months. In other asset markets, prices for equities and commercial property have risen, in part as a result of declining long-term interest rates.

So, in the meeting the Board decided that, having eased monetary policy at the previous meeting, it was appropriate to hold interest rates steady for the time being. The case will further assessed by them for such action at forthcoming meetings.

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