At the meeting on Tuesday, February 2, Committee on monetary policy the Reserve Bank of Australia kept its key interest rate at 3.75%. The decision came as a surprise to market participants, as economists predicted rate increase to 4.00%.
Glenn Stevens, head of the bank in its statement after the meeting indicated that economic conditions in Australia are improving faster than predicted earlier.
Inflation, as expected, fell from a peak in 2008, in particular, reflecting the decline in commodity prices in late 2008, a marked reduction in labor costs in the private sector during 2009 and growth of the exchange rate. It is expected that inflation will meet the target value in 2010.
Because the risk of a serious economic recession in Australia is already behind us, the Committee on monetary policy the Reserve Bank of Australia moved to raise the basic interest rate for the previous meetings. The Committee believes that it is now necessary to maintain the current monetary policy in connection with the fact that the effect of previous changes are not yet fully understood.
If economic conditions will develop in line with forecasts, the Committee will continue to adjust monetary policy to ensure that the inflation target value in the medium term.
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