SYDNEY, Feb 6 Reuters Australia39;s central bank held interest rates steady on Tuesday but cautioned that a further increase could not be ruled out given inflation was still too high, a strong signal that it isn39;t in a hurry to start easing policy anytime soon.

The relatively hawkish tone of the central bank39;s statement boosted the Australian dollar and saw futures push out the likely timing of a first easing to September from August. 

Wrapping up its first policy meeting of the year, the Reserve Bank of Australia RBA kept rates at a 12year high of 4.35, but left the door open to another rise if needed.

Markets had wagered heavily on a steady outcome given inflation had eased by more than expected in the fourth quarter, but the RBA statement indicated it was still not confident that inflation was on a sustainable path towards its 23 target.

While recent data indicate that inflation is easing, it remains high… The Board needs to be confident that inflation is moving sustainably towards the target range, said the RBA Board in a statement.

The central bank did trim its forecasts for inflation and economic growth but emphasised demand was still running ahead of supply, suggesting it would be in no rush to cut rates.

The Australian dollar rose 0.4 to 0.6512, having hit an 11week low of 0.6469 overnight. Threeyear bond futures were down 5 ticks to 96.3 and markets moved to price in the first cut will come in September, from August before the RBA statement.

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