Australia holds interest rate at 7.25%, Trade deficit narrows. | CountingPips Forex & Currency Trading Blog

May 6, 2008 - Forex Economic News

Australia holds interest rate at 7.25%, Trade deficit narrows.

The Reserve Bank of Australia held its official cash lending rate unchanged today at 7.25 percent for the second consecutive month. Australia had raised its interest rate by 25 basis points in each of February and March in the face of high inflationary pressures. Australia's cash rate is at its highest level since 1996 when it stood as high as 7.50 percent as the RBA is trying to contain inflation rates that are exceeding the RBA's inflation target of 2 to 3 percent.

Australia's Glenn Stevens, Governor of Monetary Policy, stated in the report that, "Inflation in Australia has been high over the past year, with the CPI rising by a little over 4 per cent and underlying measures at a similar pace. Price rises were widespread, in an environment of limited capacity and earlier strong growth in demand. In order to reduce inflation over time, growth in aggregate demand needs to be significantly slower than it was in 2007. Evidence is accumulating that this is occurring."

Australia trade deficit narrows.

The Australian trade deficit narrowed in March according to data released by the Australian Bureau of Statistics. Australia’s trade balance for March was a seasonally adjusted deficit of A$2.736 billion. March's deficit was A$525 million less than a revised a deficit of A$3.261 billion in February. Contributing to the narrowing of the deficit was an increase in exports of goods and services as exports increased by 4 percent in March to a seasonally adjusted A$19.176 billion. Exports of rural goods increased by 6 percent for the month while exports of non-rural and other goods increased by 5 percent. Total imports increased by 1 percent for the month of March with capital goods increasing by 4 percent and consumption goods increasing by 2 percent.

Tags: australia interest rate, aud, trade balance, deficit, rba, cash rate

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