Business

RBA opens door to rates cut

The RBA came under fierce criticism for its decision not to cut the cash rate in April, particularly from the struggling housing and construction sectors.
The RBA came under fierce criticism for its decision not to cut the cash rate in April, particularly from the struggling housing and construction sectors.
  • Board is waiting for demand to slow before easing the cash rate
  • Economy performed worse than expected in the second half of last year
  • Outlook for dwelling prices hit developer confidence hard

THE Reserve Bank board has left the door open for cutting the cash rate when it next meets in May, a week before Treasurer Wayne Swan hands down his fifth Federal Budget.

Board members had lowered their assessment of the pace of growth since cutting 25 basis points from the cash rate in December, minutes from their April 3 meeting reveal.

The Reserve board opted to leave the cash rate on hold at 4.25%.

"If slower growth in demand could be expected to result in a more moderate inflation outcome, then a case could be made for a further easing of monetary policy," the minutes read.

Minutes from the meeting indicate the board thought it "prudent" to assess an array of new data before considering an adjustment to monetary policy.

"The board would have the opportunity at its next meeting to review the inflation outlook based on comprehensive new data on prices, as well as information on demand and output," the minutes read.

The board indicated the Australian economy had performed below expectation in the latter part of last year.

"The national accounts for the December quarter had shown an increase in real GDP of 0.4% in the quarter and 2.3% over the year, which were both lower than expected," the minutes read.

"Private domestic demand had grown strongly over the year, led by growth in mining investment.

"However growth in exports over 2011 had been weaker than expected, mainly because of lower coal exports, which, in turn, reflected a slower recovery from the floods in Queensland in early 2011, together with a slower take-up of new rail and port facilities in NSW and Queensland."

The RBA came under fierce criticism for its decision not to cut the cash rate in April, particularly from the struggling housing and construction sectors.

Board members considered the challenges facing these industries in arriving at their April decision.

"Members spent some time exploring reasons for the weakness in many of the indicators for housing turnover and building activity across Australia," the minutes read.

"They noted the apparent sensitivity of developers to the outlook for dwelling prices. New dwelling construction had fallen in the December quarter and there was little sign of a pick-up in building or loan approvals, though house prices had shown some signs of stabilising recently."

Topics:  cash rate, developers, dwelling approvals, rba, wayne swan


Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

MS sufferer halfway to a healthier future

TREATMENT QUEST: Mary Cullinane has reached the halfway mark in her fundraising to get stem cell treatment in Russia.

Mary Cullinane has reached the halfway mark in her fundraising.

Road to Rio for our vet

TEAM MAN: WestVets owner doctor Nathan Anthony is Rio bound as team vet for the equestrian team.

Vet Nathan Anthony will assist the Australian eventing team in Rio.

Robert Moffatt claims Gatton Show Boral Grand Prix

BIG JUMP: Robert Moffatt and Viduka clear the Boral jump on their way to victory the Grand Prix.

Riders battle wet conditions for Gatton Show grand prix.

Latest deals and offers

Centenary affair for life member Erick and Gatton Show

HE’S the oldest life member of the Gatton Show Society, and together and equally as old as the show itself.

MS sufferer halfway to a healthier future

TREATMENT QUEST: Mary Cullinane has reached the halfway mark in her fundraising to get stem cell treatment in Russia.

Mary Cullinane has reached the halfway mark in her fundraising.

Road to Rio for our vet

TEAM MAN: WestVets owner doctor Nathan Anthony is Rio bound as team vet for the equestrian team.

Vet Nathan Anthony will assist the Australian eventing team in Rio.

Robert Moffatt claims Gatton Show Boral Grand Prix

BIG JUMP: Robert Moffatt and Viduka clear the Boral jump on their way to victory the Grand Prix.

Riders battle wet conditions for Gatton Show grand prix.

Jed Morgan set to tee off for Australia in golf championships

Hatton Vale golfer Jed Morgan will represent Australia in Tawain next month.

Hatton Vale golfer Jed Morgan will represent Australia in Taiwan.

Passenger killed in fatal car crash at Forest Hill

Police generic, crime scene.  Photo Tessa Mapstone / South Burnett Times

A car craat Forest Hill has claimed the life of a 40-eyar-old woman.

Pop icon and former Neighbours star buys into Byron

Singer Natalie Imbruglia. Supplied by Sony Music Australia.

Former actor turned pop singer joins Byron celebrity rush.

MASTERCHEF: Coast cooks to dominate finals

SO CLOSE: MasterChef's final four, from left, Matt Sinclair, Elise Franciskovic, Harry Foster and Elena Duggan. Elise’s elimination means now only the three Sunshine Coast contestants remain in the competition.

MasterChef finals will be mandatory viewing in three Coast homes

The best and worst bits of Splendour from our experts

The Amphitheatre received Flume with open arms and danced to his music on Sunday night.

The good, the bad and the plain weird

Elise's emotional exit from MasterChef quarter finals

MasterChef Australia Top 4 contestant Elise Franciskovic.

CAIRNS cook struggles after receiving letter from fiance.

Reno stars want tradies to focus a little more on one thing

The Demmrichs want Tradies to look after their most important tool

Fashionistas show off at Splendour in the Grass

Amberly Nelson, from Melbourne, posts for a photo with friends at Splendour in the Grass.

GLITTER, skin and mesh were all on show at festival this weekend.

You can own this Queensland town for just $1

Yelarbon

Unprecedented auction of town's business centre with no reserve

Work starts on $15M Caloundra apartment building

Turning the first sod at the Aqua View Apartments site in Kings Beach are (from left) husband-and-wife developers Alex Yuan and Stella Sun with construction company Tomkins director Mike Tomkins and Councillor Tim Dwyer.

Developers excited about addition to Kings Beach skyline

72-year-old Coast developer set to start new project

GREEN LIGHT: The Cosmopolitan has been approved for development at Cotton Tree.

Meet the Canberran set to deliver another chapter for Coast suburb

Plans revealed for 1500-lot 'master-planned community'

Precinct will be bounded by Boundary St and Shoesmith Rd

Ecco Ripley sales run sparks prime release

MOVING IN: Sekisui House has announced the release of more residential blocks at Ecco Ripley.

Sekisui House is preparing to unveil more land at Ecco Ripley

The climb is slow but property on the way up

Michael Matusik, director of Matusik Property Insights.Photo Allan Reinikka / The Morning Bulletin

The improvement would be mild when compared to past cycles