Reserve Bank of Australia Keeps Interest Rates on Hold at 5.50%
The Reserve Bank of Australia, the country's central bank, has left interest rates unchanged at 5.50 per cent. Despite inflation reaching its target range of two to three per cent, the bank decided to stay the course, citing underlying inflation under control and no convincing reason to lift rates. Analysts had expected the bank to keep rates on hold, and Commsec chief equities economist Craig James has said that the Reserve Bank got it "very much right".
Key Takeaways:
- The Reserve Bank of Australia has left interest rates on hold at 5.50 per cent, despite inflation reaching its target range of two to three per cent.
- The bank cited underlying inflation under control and no convincing reason to lift rates, in line with expectations from analysts.
- Commsec chief equities economist Craig James has stated that the Reserve Bank got it "very much right" in keeping rates on hold.
- The decision is seen as a cautious move, with no pressing need for the bank to move interest rates in any direction.
- The United States Federal Reserve, in contrast, has lifted rates for the 12th consecutive month, with official rates now at 4.0 per cent.
- With no imminent plans to increase rates, the Reserve Bank will likely remain on the sidelines until well into 2006.
- The decision to keep interest rates on hold is expected to have a positive impact on the construction sector, which will be reflected in building figures released later today.
Statistics:
- Official interest rate: 5.50 per cent
- Target inflation range: 2-3 per cent
- Current inflation rate: 3 per cent
- US Federal Reserve official rate: 4.0 per cent
- Number of consecutive rate hikes in the US: 12
- Forecasted hold on interest rates until: well into 2006
Sources:
- Asia Pulse, 02-Nov-2005, 0952 AEDT
- Reserve Bank of Australia, 02-Nov-2005, 0930 AEDT
- Commsec, 02-Nov-2005 ( Craig James' statement to Sky News )
- United States Federal Reserve, 2005 (consecutive rate hikes and current official rate)