RBA cuts cash rate to 2%, omits comment on further cuts

Tuesday 5th May 2015

The Reserve Bank of Australia cut its cash rate to a record low, as expected, while avoiding commenting on further cuts.

The kiwi dollar traded at 95.52 Australian cents from 75.99 cents immediately before the statement.

The RBA said that at today's meeting, the board judged that the inflation outlook "provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand."

Heading into today's decision, traders had been betting on a 75 percent chance of a rate cut today. Traders see 32 basis points of cuts over the next 12 months, based on the Overnight Interest Swap curve.

Governor Glenn Stevens said the Australian dollar has declined noticeably against a rising US dollar over the past year, though less so against a basket of currencies."

"Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices," Stevens said.

BusinessDesk.co.nz

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