Dollar dips but interest rates remain on hold

Two months after the Reserve Bank of Australia (RBA) cut rates to a historic low of 2.75 percent, the RBA Board has today opted to again keep the official interest rate on hold. Today’s RBA decision comes as the National Farmers’ Federation (NFF) releases its June Agribusiness Loan Monitor, which shows that only one bank passed on a rate cut during this month – Bendigo Bank, with a rate cut of 0.25 percent for its term loan and agribusiness customers – following rate cuts from all other financial lenders in May. NFF CEO Matt Linnegar said it was pleased to see that all banks had now passed on at least some of the RBA’s rate cut, with the majority of lenders passing on the full 0.25 percent. “Even though the RBA today left rates on hold, the rate cuts from the banks following the May interest rate reduction, combined with the fall in the Australian dollar over the past two months, brings with it some relief for the farming sector,” Mr Linnegar said. “As Australia exports 60 percent of its agricultural produce, Australian farmers watch the financial markets almost as closely as they watch the weather. “As the dollar value reduces, Australia’s farm exports become more competitive on the global market, which is why we’re pleased to note that the Australian dollar is today sitting at 92 cents against the US dollar, after dipping below parity in mid May. “Of course, it’s a double edged sword, with farmers also relying heavily on many imported inputs – like machinery and diesel – the costs of which will go up with a weaker Australian dollar,” Mr Linnegar said. Mr Linnegar’s comments come as farmers patiently await detail from the Federal, State and Territory Governments on the Farm Finance package, announced in late April. “Two months after the Federal Government announced that financial assistance would be made available to farmers facing hardship, we are still yet to see any of the State or Territory Governments sign up to the package,” Mr Linnegar said. “This means that two months on, not a single dollar has been passed on to a farmer in need. We urge the respective governments to put the politics aside and get on with delivering the policy,” Mr Linnegar said. The NFF’s June Loan Monitor is available http://www.nff.org.au/publications.html#cat_2119[here]. The Monitor is compiled each month by leading money market monitor Canstar and published by the NFF as a tool for all Australian farmers.