Statement by Glenn Stevens, Governor: Monetary Policy Decision - June 2010 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2010-06-01

Media Release
Statement by Glenn Stevens, Governor:
Monetary Policy Decision
1 June 2010
At its meeting today, the Board decided to leave the cash rate unchanged at 4.5 per
Since the Board last met, concerns about sovereign creditworthiness in several European
countries have been a focus of financial markets. Investors have generally
displayed a good deal more caution. As a result, equity prices have fallen
and long-term government bond rates have declined outside of the countries
most affected by the sovereign concerns. The Australian dollar fell sharply
as part of this adjustment. Commodity prices have also softened, though those
important for Australia remain at very high levels.
European policymakers have responded by assembling a large package to provide financing
for the relevant countries for a period of time, stabilise bond markets and
provide liquidity. They have also committed to action to bring budget deficits
down and stabilise debt over time.
The effects of these various factors on the world economy will need to remain under
review. At this stage, global growth is still expected to be at about trend
pace in 2010. Conditions in Europe overall have been relatively weak, and
the foreshadowed budgetary tightening will probably mean that this will continue,
but growth is becoming more established in North America. In Asia, growth
has continued to be quite strong and may need to moderate in the year ahead.
In Australia, with the high level of the terms of trade expected to add to incomes
and demand, output growth over the year ahead is likely to be about trend,
even though the effects of earlier expansionary policy measures will be diminishing.
Inflation appears likely to be in the upper half of the target zone over
the next year.
Consistent with that outlook, and as a result of actions at previous meetings, interest
rates to borrowers are around their average levels of the past decade, which
is a significant adjustment from the very expansionary settings reached a
year ago. Taking all the available information into account, the Board views
this setting of monetary policy as appropriate for the near term.
Dr Philip Lowe
Assistant Governor (Economic)
Phone: +61 2 9551 8800
Dr Guy Debelle
Assistant Governor (Financial Markets)
Phone: +61 2 9551 8200
Media Office
Information Department