Reserve Bank of Australia (RBA) Governor Glenn Stevens (C) takes his seat for a meeting
Reserve Bank of Australia (RBA) Governor Glenn Stevens (C) takes his seat for a meeting of G-20 finance ministers and central bank governors during the IMF-World Bank annual meetings in Washington October 10, 2014. Reuters/Jonathan Ernst

The Reserve Bank of Australia has decided to keep the cash rate unchanged on Tuesday. Economists expect that there will be no change in the rates in the near future as well.

AAP conducted a survey with 14 economists who believed that the RBA would keep the cash rate at 2 percent at its October meeting. Among the surveyed economists, six predicted the change in cash rate to be on hold until late 2016.

Westpac chief economist Bill Evans predicted that the change would not appear for the time being and for the near future. He added that slowdown in Chinese economy has seen overreactions among the communities.

On the other hand, ANZ thinks that there might be a meagre percentage of point cut in February 2016 and another in May, dropping the cash rate to 1.5 percent. According to economists, economic slowdown and diminishing value of Australian dollar would be the reasons behind the decreasing cash rates.

“Currency depreciation may not work for every country, but the lower Australian dollar is already providing clear support for Australia’s growth and inflation,” HSBC chief economist Paul Bloxham said, as quoted by The SMH last week.

The Federal Reserve is believed to start enhancing the policy rates soon, but at the same time, the effort to easing policies are being put by the major central banks, claimed Glenn Stevens, RBA Governor. “Equity market volatility has continued, but the functioning of financial markets generally has not, to date, been impaired. Long-term borrowing rates for most sovereigns and creditworthy private borrowers remain remarkably low. Overall, global financial conditions remain very accommodative,” he said.

In Tuesday’s meeting, it was felt appropriate to keep the cash rates unchanged, hence the board decided to hold on to the existing rate of 2 percent. Stevens added that other strategies, assessments, outlook and current status will be informed from time to time to the public.

Contact the writer at feedback@ibtimes.com.au, or let us know what you think below.

RELATED STORIES