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RBA Reserve Bank Interest Rate Decision for September 2015?
Increase by 25 basis points 1 (12.5%)
Hold cash rate steady at 2% 6 (75%)
Decrease by 25 basis points 1 (12.5%)
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RBA Reserve Bank Interest Rate Decision for September 2015?; The RBA flags an end to rate cuts
Topic Started: 10 Aug 2015, 10:27 AM (1,805 Views)
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The RBA flags an end to rate cuts

David Uren - The Australian

The Reserve Bank’s new theory about why employment has been growing despite weak economic growth has left markets convinced there will be no further rate cuts this year, with many economists arguing there will be no more cuts this cycle.

Market estimates of the likelihood of a rate cut by December have wound back from 68 per cent ahead of the RBA’s board meeting last week to 44 per cent by Friday. But the bank itself is much less certain, both about its new explanation for the economy’s apparent resilience and about the way it will be buffeted by international developments.

The bank’s quarterly monetary policy statement is strikingly optimistic about the potential impact of the imminent shift by the US Federal Reserve to lift rates, while the bank sees the uncertain course of the Chinese economy as the principal downside risk.

The bank’s benchmark cash rate could either be raised or cut far sooner than markets expect.

The quarterly review shows it no longer expects unemployment to climb to 6.5 per cent over the next year but believes it will remain about 6 per cent for the next 18 months before declining in 2017. This is consistent with the trend in the labour force survey this year, with a steady unemployment rate and, if anything, a slight improvement in the share of the population in work.

The bank believes this stable trend in employment being maintained at the same time as economic growth has barely reached 2.5 per cent is explained by the downgrading in the Australian Bureau of Statistics’ estimate of Australia’s population growth over the past year from the 1.7 per cent embedded in the bank’s May forecasts to 1.4 per cent.

“Lower population growth lowers the growth in demand for goods and services, as well as the economy’s capacity to supply those goods and services,” the quarterly report says.

“On the demand side, lower population growth would, all else being equal, be associated with less growth in consumption. Over time, it may also reduce the need to expand the capital stock through investment in residential housing, non-residential buildings, machinery and equipment and so forth.

At the same time, lower population growth implies that there are fewer individuals available to be employed in ­producing goods and providing services.”

Together with its upward revision to underlying inflation caused by the falling dollar, there is nothing in the bank’s outlook that suggests rates would be lowered. Inflation is now expected to sit comfortably in the middle of the bank’s 2-3 per cent target band, rather than just above the bottom threshold as predicted in May.

Nor is there anything suggesting an increase. The bank indicates it is comfortable with keeping rates at their current level, noting that there remains considerable idle capacity in both business and in the labour market.

However, the bank admits it is far from certain about its new perspective on the economy. It is open about the possibility that the data might prove it wrong. The idea that Australia’s potential growth might be lower than the 3.25 per cent that has been part of both bank and Treasury thinking for years was first advanced as not much more than a speculation in Glenn Stevens’ speech to the Anika Foundation two weeks ago.

Read more: http://www.businessspectator.com.au/article/2015/8/10/reserve-bank-australia/rba-flags-end-rate-cuts
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Gossamer
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Still no change. But another cut is coming.
Common sense is a curse - those who have it need to suffer dealing with those who don't have it.

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Nelson
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newjez
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Gossamer
10 Aug 2015, 11:28 AM
Still no change. But another cut is coming.
Dollar, he say no, but I think you're right.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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John F. Kennedy
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Gossamer
10 Aug 2015, 11:28 AM
Still no change. But another cut is coming.
No, I think they are done, and their recent activities are a tacit admission that they went too far already and are embarrassed about this year's consequences so far.
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stinkbug
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No rate changes for the rest of the year.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Gossamer
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RBA leaves cash rate at emergency low of 2%
Common sense is a curse - those who have it need to suffer dealing with those who don't have it.

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Nelson
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