Reserve Bank Announces No Interest Rate Change – June 2nd
Posted June 2nd, 2009
The Reserve Bank of Australia moments ago announced that the official cash rate of 3.00% or 300 basis points will remain unchanged.
While there was little estimation that the cash rate would increase, financial analysts agreed that there the RBA would unlikely slash the cash rate in the June announcement. Economists do estimate however that rates will drop another 50 basis points (0.50%) by the end of 2009.
Glenn Stevens, governor of the RBA stated that the Australia economy is in contraction, and capacity utilisation is likely to slump throughout the remainder of 2009.
Due to the economic slowdown, a decrease in the demand for labour is expected to dimish growth in wages across Australia.
“The prevailing economic conditions are likely to cause inflation to wane over the next couple of years” said Stevens.
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