Australia Cash Rate Unchanged at 2.0 Per Cent

A customer shops in the pharmacy department of a Target store in the Brooklyn borough of New YorkA customer shops in the pharmacy department of a Target store in the Brooklyn borough of New York June 15, 2015. REUTERS/Brendan McDermid

Australia Momentary Policy meeting led by Governor Glenn Stevens decides to leave the cash rate unchanged at 2.0 per cent.

According to the statement, global economy is expanding at a reasonable pace but commodity prices are much lower compared with a year ago. The low commodity prices was attributed to increase in supply even from Australia.

The statement further confirmed that Australia’s terms of trade are falling, though Federal Reserve is expected to start increasing its policy rate later this year, other central banks are still implementing policy easing program to support their economy and create more jobs.

Economic data from U.S has shown continuous growth of global financial market, the very reason why investors are expecting rate hike in September after a notable surge in inflation rate from 1.7 percent to 2 percent.

Overall global economy outlook remain favourable despite market rout in China and economic uncertainty in Greece, long term borrowing rates for most creditworthy private borrowers and sovereigns remain remarkably low.

In Australia, the economy is growing even though the rate of growth has been fairly below longer-term averages. The available information suggests that there is somewhat stronger growth of employment and stable unemployment rate over the past year, overall the economy is likely to be functioning in a sustainable capacity for some time.

The statement also stated “that domestic inflationary pressures have been contained, hence inflation forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate”.

Australian currency gained 0.5 percent after the report was released.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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