RBA Cautious About Further Easing
2025-02-27
1236
(fxcue news) - The Reserve Bank of Australia is cautious about lowering the benchmark interest rate further and the decision to cut the rate in February does not mean that the bank is committed to cut again at coming meetings.
"Members observed that not having lifted interest rates as high as in countries that had faced a similar inflation challenge meant the Board should be cautious when deciding to lower the cash rate," the minutes of the meeting held on February 17 and 18 showed.
While economic outcomes had given policymakers more confidence that they could return inflation to target at the same time as preserving most of the gains in the labor market with a lower cash rate, they agreed that this was not yet assured.
"They emphasized that the decision at this meeting acknowledged the progress that had been made in reducing inflation while not committing the Board to ease policy further," the minutes said.
At the February meeting, the bank had reduced the interest rate for the first time since 2020. The rate was lowered by 25 basis points to 4.10 percent. The board observed that the case for lowering the cash rate target was 'stronger one'.
Elsewhere, data from the Australian Bureau of Statistics showed that retail sales recovered in January underpinned by the food-related spending.
Retail sales grew 0.3 percent month-on-month in January, following a 0.1 percent fall in December.
"While the pick-up in retail spending since mid-2024 has been boosted by more discretionary spending, this month's rise is mostly driven by food-related spending," ABS head of business statistics Robert Ewing said.
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