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



Suicide rate reaches 10-year high

Eight people per day last year took their own life

Fatal Koumala truck crash accused appears in court

A road is closed after an accident as police forensically map the scene.

A man has been formally charged after a fatal truck accident.

Supermum: Getting on the public transport route

Waiting for the bus in Brisbane.

The wheels on the bus go round and round for Supermum on holiday

Local Partners

Channel 9 orders second season of Doctor Doctor

Rodger Corser stars in the TV series Doctor Doctor.

RURAL medical drama finds a loyal following.

Katy Perry gets naked to encourage people to vote

Katy Perry in Funny Or Die sketch

Katy Perry has stripped naked for a comedy video

Jogging Tom Hanks crashes wedding in Central Park

Tom Hanks stopped for a selfie with this bride and groom

MOVIE REVIEW: Storks delivers family fun

A scene from the movie Storks.

ANIMATION can be hit or miss but when it hits, it hits hard.

Nick 'the snake' to call the shots on Survivor jury

Australian Survivor contestant Nick Iadanza.

LATEST evictee is out of the game but will still have a say.

Naomi Watts and Liev Schreiber split

Naomi Watts and Liev Schreiber

Naomi Watts and Liev Schreiber have split after 11 years together.

$40million hotel, shops development project for Mackay

Mt Pleasant hotel and retirement accommodation, proposed at 194-202 Malcomson St.

$40m development to take Mackay to 'the next level'

Projects hoped to revive Rockhampton real estate

There have been just over 800 house sales in Rockhampton this year

Property 200m from ocean selling for just over $100K

BEACHCOMBER PARK: Work has started on a new $19.2 million development at Toogoom.

The estate's developer is offering huge discounts for early buyers.

UPDATE: Former rodeo champ's sale rained out, now back on

Larkhill local Ken Consiglio is having an auction of most of the things on his property.

'People kept showing up and we had to turn them away'

First stages of $25 million housing development underway

New development on Madsen Rd - The Springs.

The blocks of land are much bigger than usual

14% of renovators doing own electrical work?

Landscaping (46%), demolition (43%) and interior design (77%) are also often tackled head on by plucky homeowners.

And 12% said they did their own plumbing work