AdviserVoiceRBA: rise in foreign bank investment, interest rates on hold https://www.adviservoice.com.au/2011/05/rba-minutes-rates-on-hold-for-nowforeign-central-bank-investment-on-the-rise/ Financial planner information & financial planner education/CPD - AdviserVoice Thu, 04 Jun 2026 21:30:42 +0000 en-US hourly 1 https://wordpress.org/?v=7.0 RBA minutes: rates on hold for now,foreign central bank investment on the rise https://www.adviservoice.com.au/2011/05/rba-minutes-rates-on-hold-for-nowforeign-central-bank-investment-on-the-rise/ https://www.adviservoice.com.au/2011/05/rba-minutes-rates-on-hold-for-nowforeign-central-bank-investment-on-the-rise/#respond Wed, 18 May 2011 02:07:31 +0000 https://adviservoice.com.au/?p=8757 Lending finance; RBA Board minutes
  • Lending rebounds, albeit from a low base. Total lending finance rose by 7.7 per cent in March after sliding by 5.7 per cent in February. Encouragingly commercial finance rose by 13.3 per cent in March while personal finance rose by 0.5 per cent in March – marking just the third gain in the past nine months.
  • Renovations remain out of vogue. The value of loans for alterations and additions fell by $5.4 million in trend terms to $364 million in March – marking the lowest levels in nine years.
  • The Reserve Bank has not suggested that there is an immediate need to raise interest rates. Interestingly the Reserve Bank did highlight that “the underlying measures of inflation – at 0.7–0.9 per cent in the quarter – were a little higher than expected, although looking through the volatility in the quarterly numbers, the outcomes over the past six months had been in line with expectations last November.”
  • The Reserve Bank did also provide fresh insight into the strength of the Australian dollar commenting that foreign central banks were investing in Australia. “While this partly reflected the general depreciation of the US dollar, the Australian dollar had tended to rise more than most other currencies. An important influence had been purchases by other central banks seeking to invest their official reserve assets.”

What does it all mean?

  • The latest Reserve Bank Board minutes indicate that members are not as hawkish as some analysts initially thought. While rate hikes are likely to take place over the next six months, there was nothing in the minutes to suggest the Reserve Bank was likely to be overly aggressive on interest rates in the near term. Certainly the minutes highlighted that underlying inflation expectations were pretty much in line with what the central bank had anticipated in November last year.
  • In the short term the impact of the natural disasters have taken its toll on an economy that was already in the midst of cooling. In effect this has stilled the Reserve Bank’s hand on interest rates over the last few months. And the latest minutes don’t indicate that the Reserve Bank is in any rush to raise rates.
  • In the near term domestic activity is likely to remain subdued with the weakness in housing activity, generally sluggish business conditions and lack of consumer spending being the main drags on the economy. At the same time the strength of the Australian dollar is also playing a part in curbing momentum and detracting from exports.

 

Produced by Commonwealth Research based on information available at the time of publishing. We believe that the information in this report is correct and any opinions, conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability orcompleteness. To the extent permitted by law, neither Commonwealth Bank of Australia ABN 48 123 123 124 nor any of its subsidiaries accept liability to any person for loss or damage arising from the use of this report. The report has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should,before acting on the information in this report, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needsand, if necessary, seek appropriate professional advice. In the case of certain securities Commonwealth Bank of Australia is or may be the only market maker.This report is approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399 a wholly owned but not guaranteed subsidiary ofCommonwealth Bank of Australia. This report is approved and distributed in the UK by Commonwealth Bank of Australia incorporated in Australia with limited liability.Registered in England No. BR250 and regulated in the UK by the Financial Services Authority (FSA). This report does not purport to be a complete statement or summary. For the purpose of the FSA rules, this report and related services are not intended for private customers and are not available to them. Commonwealth Bank of Australia and its subsidiaries have effected or may effect transactions for their own account in any investments or related investments referred to in this report.
]]> Lending finance; RBA Board minutes
  • Lending rebounds, albeit from a low base. Total lending finance rose by 7.7 per cent in March after sliding by 5.7 per cent in February. Encouragingly commercial finance rose by 13.3 per cent in March while personal finance rose by 0.5 per cent in March – marking just the third gain in the past nine months.
  • Renovations remain out of vogue. The value of loans for alterations and additions fell by $5.4 million in trend terms to $364 million in March – marking the lowest levels in nine years.
  • The Reserve Bank has not suggested that there is an immediate need to raise interest rates. Interestingly the Reserve Bank did highlight that “the underlying measures of inflation – at 0.7–0.9 per cent in the quarter – were a little higher than expected, although looking through the volatility in the quarterly numbers, the outcomes over the past six months had been in line with expectations last November.”
  • The Reserve Bank did also provide fresh insight into the strength of the Australian dollar commenting that foreign central banks were investing in Australia. “While this partly reflected the general depreciation of the US dollar, the Australian dollar had tended to rise more than most other currencies. An important influence had been purchases by other central banks seeking to invest their official reserve assets.”

What does it all mean?

  • The latest Reserve Bank Board minutes indicate that members are not as hawkish as some analysts initially thought. While rate hikes are likely to take place over the next six months, there was nothing in the minutes to suggest the Reserve Bank was likely to be overly aggressive on interest rates in the near term. Certainly the minutes highlighted that underlying inflation expectations were pretty much in line with what the central bank had anticipated in November last year.
  • In the short term the impact of the natural disasters have taken its toll on an economy that was already in the midst of cooling. In effect this has stilled the Reserve Bank’s hand on interest rates over the last few months. And the latest minutes don’t indicate that the Reserve Bank is in any rush to raise rates.
  • In the near term domestic activity is likely to remain subdued with the weakness in housing activity, generally sluggish business conditions and lack of consumer spending being the main drags on the economy. At the same time the strength of the Australian dollar is also playing a part in curbing momentum and detracting from exports.

 

Produced by Commonwealth Research based on information available at the time of publishing. We believe that the information in this report is correct and any opinions, conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability orcompleteness. To the extent permitted by law, neither Commonwealth Bank of Australia ABN 48 123 123 124 nor any of its subsidiaries accept liability to any person for loss or damage arising from the use of this report. The report has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should,before acting on the information in this report, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needsand, if necessary, seek appropriate professional advice. In the case of certain securities Commonwealth Bank of Australia is or may be the only market maker.This report is approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399 a wholly owned but not guaranteed subsidiary ofCommonwealth Bank of Australia. This report is approved and distributed in the UK by Commonwealth Bank of Australia incorporated in Australia with limited liability.Registered in England No. BR250 and regulated in the UK by the Financial Services Authority (FSA). This report does not purport to be a complete statement or summary. For the purpose of the FSA rules, this report and related services are not intended for private customers and are not available to them. Commonwealth Bank of Australia and its subsidiaries have effected or may effect transactions for their own account in any investments or related investments referred to in this report.

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