In the Reserve Bank’s April board meeting today, the cash rate was left on hold at 4.25%. This was in line with economists’ expectations, but there is growing support for an easing in the cash rate based on recent data such as poor dwelling starts and retail sales.The board pointed to a potential downward movement, but will look to forthcoming key data to reassess inflation forecasts.
From the board meeting minutes;
The Board eased monetary policy late in 2011. Since then, its judgement has been that, with growth expected to be close to trend, inflation close to target and lending rates close to average, the setting of monetary policy was appropriate. The Board’s view was also that, were demand conditions to weaken materially, the inflation outlook would provide scope for easier monetary policy. At today’s meeting, the Board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy.