Tuesday, September 20, 2011

RBA "well positioned" to cut rates but rate cut seen unlikely

The Reserve Bank has signalled it is well-placed to cut interest rates if global economic conditions continue to deteriorate.

But in the minutes from its September meeting a fortnight ago, the central bank board says it is still determining how those pressures might help contain inflation.

Here's my take on the RBA minutes broadcast on The World Today.

The RBA is also concerned about the soft Australian economy and the continuing impact of the high Australian dollar on manufacturing and tourism.

However the minutes show the board is sceptical about market predictions for an interest rates cut, warning that a range of technical factors mean market pricing might not be accurate given the current circumstances.

The weakening chance of a rate cut by the end of the year pushed the Australian dollar as high as 102.58 US cent after the minutes were released.

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