6 Feb 2013

In probably the most anticipated move for the past 12 months, the RBA kept rates on hold for February – in what was their first meeting of 2013. While the economy is far from healthy, with significant sections still in the doldrums, there are enough positive signs around for the RBA to act with caution.

The RBA’s statements are normally very staid reading, however this month was more instructive with the Bank making it clear that they still had concerns about the underlying strength of the national economy – especially once the resources sector investment runs its course. This article in today’s Australian sets the case quite clearly.

While the RBA is mandated to keep inflation in a 2-3% band, it also doe skeep an (unofficial) eye on unemployment and many economists are tipping this to rise over the coming months. With inflation at the low end of the range (2.2%) the RBA seems to be happy to keep its powder dry for now, with a view to further cuts down the track if unemployment rises and business confidence is weak.