Reserve Bank Interest rate update – June 2011 meeting

At its June 2011 Meeting the Reserve Bank again voted to keep interest rates on hold.

Interest rates have been kept on hold again in June after the Reserve Bank board met to discuss monetary policy. Inflation pressures are often the key drivers of monetary policy and the Board this time around said

“CPI inflation has risen over the past year, reflecting the effects of extreme weather and rises in utilities prices, with lower prices for traded goods providing some offset. The weather-affected prices should fall back later in the year, though substantial rises in utilities prices are still occurring. The Bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the next 12 months.”

In terms of lending and property the bank said,

“Overall credit growth remains quite modest. Signs have continued to emerge of some greater willingness to lend, and business credit has expanded this year after a period of contraction. Growth in credit to households, on the other hand, has softened, as have housing prices.”

Australian economists are in general leaning toward greater possibility of a rate rise in September. Until next time.

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