RBA satisfied that stable interest rates are doing their job


In his opening statement before parliament on Friday, RBA Governor Stevens reaffirmed a similar message spelled out in previous commentary - that we are in for a "period of stability in the cash rate". 

Stevens downplayed the up-tick in inflation, and remained cautious about the impact of slower mining investment. 

However, at the same time, he seemed satisfied that interest rates were doing their job to support the economy and that the "hand over" in growth drivers was occurring in the economy from mining investment to other sectors. 

We continue to remain comfortable with our long-held view for the RBA to keep rates on hold for most of this year, before raising them towards the end of this year.

In economic data published on Friday, the AiG performance of construction index fell by 4 points in February to 44.2. 

The biggest decline occurred in the engineering sub-index, which fell 14.6 points.

Share Markets: 

Equity markets were mixed over the weekend. The Dow rose 0.2%, the S&P 500 was flat and the Nasdaq fell 0.4%. The US jobs report (see below) was well received but European markets were unsettled by events in Ukraine.

The FTSE was down 1.1%, the Dax fell 2.0% and the French CAC 40 index was down 1.2%.


The USD index rose on the US jobs data while the AUD was weaker this morning in NZ trade following the weaker than expected Chinese export numbers.


US interest rose on the back of the firmer than expected US jobs data.

With the US recovery still underway, the Fed appears likely to continue tapering its program of quantitative easing. 

Australian bond yields were also a touch firmer on Friday in line with the steadily improving economic data.


Apart from oil, commodity prices were weaker over the weekend.

The first default by a Chinese company in the relatively new Chinese corporate bond market unnerved some copper traders as did the weaker than expected Chinese exports numbers (see below).

Copper prices fell 3.8% while West Texas crude oil rose by a dollar to US$102.6 per barrel.


Chinese exports fell 18.1% in the year to February following a 10.6% rise in the year to January.

Similar post-December volatility has been seen in previous years and the drop is not a cause for concern at this stage.

Chinese imports remained firm at 10.1% growth in the year to February.

Inflation in China moved lower in February.

Producer prices fell 2.0% in the year to February while the pace of consumer inflation was 2.0% over the same period.

The benign inflation outcomes give China the room to ease official interest rates if the need arises.

German industrial production rose 0.8% in January, to be up 5.0% over the year, the fastest annual growth rate since October 2011.


The leading index rose from 111.7 in December to 112.2 in February.  This outcome was slightly below consensus expectations.

United States: 

US non-farm payrolls rose 175k in February, and there were revisions which added a further 25k to the jobs gains of the prior two month.

These now stand at 84k in December and 129k in January. There was little obvious impact in the February numbers of weather related issues.

The US trade deficit was little changed at $39.1bn in January from just under $39bn in December, with a 0.6% rise in both exports and imports.

Urannah to transform region like Fairbairn Dam to Emerald

Premium Content Urannah to transform region like Fairbairn Dam to Emerald

Fairbairn Dam’s massive transformative impact on the Central Highlands would be...

CQ business expands with Mackay company takeover

Premium Content CQ business expands with Mackay company takeover

A business takeover has created job opportunities for trade assistants...

Exciting new app for CQ News subscribers

Premium Content Exciting new app for CQ News subscribers

Our commitment to local news remains number one and we are keen to ensure you make...