By Claire Reilly
The Reserve Bank of Australia announced it would keep the official cash rate on hold at 4.25 per cent today, stating that “with growth expected to be close to trend, inflation close to target and lending rates close to average,” the RBA’s position on monetary policy remains unchanged.
“Recent information is consistent with the expectation that the world economy will grow at a below-trend pace this year, but does not suggest that a deep downturn is occurring,” said the governor of the RBA, Glenn Stevens.
“In Australia, growth in domestic demand ran at its fastest for four years in 2011, driven by private spending,” he said. “Nonetheless the balance of recent information suggests that output growth was somewhat below trend over the year.
“There are differences in performance between sectors, and considerable structural change is occurring. Labour market conditions softened during 2011, though the rate of unemployment has been little changed for some time.
“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.”
In other economic news, the Australian Bureau of Statistics released Retail Trade figures for February 2012, noting a modest rise in retail turnover.
“The seasonally adjusted estimate for Australian turnover rose 0.2 per cent in February 2012 following a rise of 0.3 per cent in January 2012 and a relatively unchanged December 2011 (0.0 per cent)," said a spokesperson.
In terms of specific categories, the ABS also noted that “the seasonally adjusted estimate...rose for Electrical and electronic goods retailing (1.6 per cent)” in February 2012.
(As a brief background, the ABS states in its methodology that: “Seasonal adjustment allows for and removes the regular, reoccurring influences that could distort the short term view of what is happening. For example, retail sales figures are always larger in December due to Christmas so the spike in retail spending is smoothed out.”)
A graph showing retail trade turnover between February 2010 and February 2012.