The Reserve Bank of Australia has released the minutes for its latest Board meeting, providing some hope for investors that further interest rate cuts could be on the cards.
Indeed, investors reacted swiftly when the line reading, "Further easing of monetary policy may be appropriate over the period ahead" was excluded from the Bank's statement on monetary policy earlier this month, as it indicated that interest rates may not fall below their new 2 per cent low.
In today's minutes however, the RBA said that its members had agreed that "the statement communicating the decision would not contain any guidance on the future path of monetary policy". The board adopted a similar approach when they cut interest rates for the first time in 18 months in February this year.
It also said that: "Members did not see this as limiting the Board's scope for any action that might be appropriate at future meetings."
Investors reacted positively to the announcement, reflected by a strong rise on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) soon after its release. As would be expected, it was the nation's biggest dividend-paying stocks that led the charge, including Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and Telstra Corporation Ltd (ASX: TLS), which rose 0.6%, 2% and 0.2% respectively.
The RBA said that factors that influenced its latest decision to cut interest rates further were a stubbornly high Australian dollar, falling commodity prices, low levels of inflation and the need to encourage further strength in household demand. It did remain cautious of Sydney and Melbourne's property markets, but noted that housing price growth had declined across the rest of the country.
Of course, there is no certainty of further interest rate cuts, but it seems like one thing is for sure: low interest rates are here to stay for the foreseeable future.
While that isn't so great for retirees or savers with their cash stored away in term deposits, it is great news for dividend investors who will likely see their shares remain in high demand for some time.
