Australia leaves rate alone

By Phil Boeyen, ShareChat Business News Editor

Wednesday 3rd April 2002

The Reserve Bank of Australia has left interest rates unchanged at 4.25% despite strong economic growth and a number of predictions by market commentators that the rate would rise.

The bank last moved on rates in December when it dropped its official cash rate to 4.25% from 4.5%.

The RBA governor normally announces any adjustment to the cash rate the day after the board meets. Although there was a meeting on Tuesday no announcement was forthcoming this morning, leaving the rate as it stands.

Australian media report that the market will now focus on the bank's May monetary policy statement, when the rate is likely to be increased. However there are mixed views as to whether it will be raised by 25 or 50 points.

The lack of movement in Australia contrasts with the 25 point increase in New Zealand's official cash rate earlier this month which pushed the local rate to 5%.

In making the change Reserve Bank governor Don Brash claimed that the economy was operating at close to full capacity and there were indications that pressures would grow further if interest rates increased.

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