There was no explicit pointer to another interest rate cut by the Reserve Bank of Australia after its policy meeting.
The RBA’s board kept the cash rate its all-time low of 2.0 per cent after its monthly get-together on Tuesday.
The decision was widely expected. Any uncertainty was centred on the guidance about possible moves in the months ahead.
The RBA did not give any clear guidance after its May meeting, when it cut the cash rate to its current level.
Its policy nowadays is to stay silent on the outlook for rates on those occasions when the cash rate is adjusted.
So keeping the cash rate steady in June cleared the way for the RBA to give some guidance on the outlook.
The lack of any obvious pointer in the latest statement suggests the RBA is expecting to stay on the sidelines for the time being. Even so, the statement did not rule out another cut and the central bank could easily trim the cash rate next month or, more likely, in August without being accused of giving a misleading signal.
If economic growth and employment growth falter, another cut will come back onto the agenda, especially if the Australian dollar fails to behaves as the RBA hopes.
“Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices,” the RBA said in the statement, reiterating a theme very familiar to readers of its commentary over the past year or so.
The outlook remains, as economists say, “data dependent”. The RBA will come off the sidelines if it thinks another cut will help.
In the statement after Tuesday’s board meeting, the RBA said its assessment of the economic and financial outlook, and therefore its preferred monetary policy stance, will be informed by incoming information.
The national accounts on Wednesday, with their estimate of March quarter economic growth, and May employment data due on Thursday next week will be key benchmarks for the RBA.
Here is a graph of how interest rates changed in Australia over the last 20 years: