Australia market ups 0.4% after RBA signals rate cut likely in May

The Australian share market closed higher in volatile trade on Tuesday, 07 April 2015, after a four-day break over the Easter weekend, amid indication that the Reserve Bank of Australia likely to cut interest rates as early as its next policy meeting on May 4. The benchmark S&P/ASX 200 Index advanced 27.40 points, or 0.46%, to 5926, while the broader All Ordinaries Index grew 23.50 points, or 0.4%, to 5893.20. Market turnover was healthy, with 1.53 billion shares changing hands worth of A$4.97 billion. Rising stocks outperformed declining ones, with total of 712 stocks up, while 663 stocks down.

The Reserve Bank of Australia held interest rates at 2.25% for the second month in row on Tuesday, but signalled another cut likely as early as its next policy meeting on May 4. The central bank lowered the rate to a new record low of 2.25% in February. In the event, bank board members have decided that a weaker Australia dollar, moderate expansion in credit growth, a pick-up in lending to business and low inflation left it the option of staying put for now. Frothy house prices in Sydney have also weighed on their deliberations, while economists have suggested the bank was waiting to assess the effectiveness of its February cut. "At today's meeting the Board judged that it was appropriate to hold interest rates steady for the time being," governor Glenn Stevens said in a statement. "Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target. The board will continue to assess the case for such action at forthcoming meetings."

 

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