The Reserve Bank of Australia (RBA) has kept the official cash on hold at 2 per cent.
The decision came after two rate cuts already this year in February and again in May.
Explaining today’s decision the central bank noted key commodity prices have been weak but puts this down to increasing supply.
Emphasis was placed on the likelihood of the US Federal Reserve raising rates over the period ahead. The central bank also highlighted further softening in conditions in the Asian region, alongside signs of recovery in Europe.
While housing market conditions were mentioned, the RBA says growth in lending to investors in the housing market appears to be easing slightly while that for owner-occupiers has picked up.
Overall the prospects for an improvement in economic conditions have firmed in recent months. Nonetheless the central bank did introduce a clear easing bias, citing inflation. The Reserve Bank observed that inflation is low and should remain so. Policymakers noted that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand
But for now the RBA says the current cash rate is appropriate and it will assess conditions in the period ahead before making any changes.
The Aussie dollar pre-empted the announcement with a move to the downside, but has now returned to a broadly steady US$0.71.
