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Reserve Bank of Australia Holds Rate Steady For First Time in Seven Months; Currency Jumps

The Reserve Bank of Australia held its overnight cash rate at 3.25% despite expectations calling for a 0.25% cut in the main policy rate. For the first time in seven months, the central bank left rates unchanged after an aggressive rate slashing campaign that began in August. Since then, the RBA has sought to prop the ailing south-pacific economy by easing liquidity. Throughout those seven months, the bank slashed the rate by 400 basis points from 7.25% to 3.25% in early February.

Expectations, however, deviated quite substantially. Of the 18 economists that Bloomberg had surveyed, four called for the bank to hold the rate steady while seven expected a 50 basis point cut. The remaining seven favored a 25 basis point move down.

The Australian Dollar jumped 48 pips against its U.S. counterpart in the seconds following the announcement.

Interestingly enough, the pair also spiked just seconds before the rate announcement, implying that some institution was made aware of the decision BEFORE it was made public.

AUD/USD Jumpes Seconds After Rate Decision; Prepared by Luis Gil using FXTrek Intellichart

AUD/USD Jumpes Seconds After Rate Decision; Prepared by Luis Gil using FXTrek Intellichart

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Filed under: Global Economics, , , , , , , , , , , , ,

2 Responses

  1. Not a suprising outcome. I stand by my call that the retail sales data tell a story here of consumers still ahving money to spend. See my post on Westfield’s figures: http://internationalbs.wordpress.com/2009/02/27/what-downturn-some-aussie-counter-evidence/

  2. Samuel says:

    Once again, we can see that everyone’s failing ! That’s the sad truth which involves each and every country !

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