The Reserve Bank of Australia (RBA) has once again kept the official cash rate on hold at a record low of 2 per cent for a ninth straight meeting.
The decision comes after two rate cuts by the RBA in February and again in May 2015.
Explaining today’s decision the central bank reiterated the global economy is continuing to grow, though at a slightly slower pace than earlier expected. China's growth rate has also continued to moderate.
Commodity prices have declined further which policy makers said partly reflect slower growth in demand but also very substantial increases in supply over recent years.
Another reason for keeping rates on hold was due to heightened volatility in financial markets recently, as participants grapple with uncertainty about the global economic outlook and diverging policy settings among the major jurisdictions.
Given these conditions, the RBA says it’s appropriate for monetary policy to be accommodative. Low interest rates are supporting demand, while regulatory measures are working to emphasise prudent lending standards. The pace of housing price growth has moderated while the exchange rate adjusts to the evolving economic outlook.
The bank says continued low inflation would provide scope for easier 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 continue to assess the outlook before making any changes.
The Aussie dollar was buying US$0.7114 following the announcement.
