Another Australia rate hike likely, though timing uncertain

MarketWatch ^ | February 15, 2010 | Michael Kitchen

[Cheap_Hessian]

LOS ANGELES (MarketWatch) - The surprise decision by Australia's central bank to leave its policy interest rate unchanged earlier this month doesn't preclude another hike in the near future, according to policy-meeting minutes released Tuesday.

The minutes from the Feb. 2 meeting of the Reserve Bank of Australia indicated further increases for the benchmark cash rate are likely, though not necessarily at the next meeting on March 2.

"Members expected that, if economic conditions continued to improve as expected, further increases in the cash rate were likely to be necessary. But they did not regard that outlook as requiring an increase at every meeting," the minutes said.

Several surveys of analysts had pointed to expectations for a quarter-point rate hike to the 3.75% policy rate in February. See full story on RBA February rate decision.

The RBA minutes said policy makers were aware of this, but that they concluded "the stronger case" was to hold steady and instead offer a "communication that, if economic conditions evolved broadly as expected, further adjustments to policy would probably be needed over time to ensure that inflation remained consistent with the target over the medium term."

[GeronL]

The UK dropped theirs to 2%