As expected, the Reserve Bank of Australia (RBA) has again kept the official cash rate on hold at a record low 1.5 per cent.
The RBA said the global economy is continuing to grow, but at a lower than average pace – with inflation remaining below most central banks’ targets. The Bank also noted China’s economy has steadied recently, but medium-term risks to growth still remain for that economy.
As for the Australian economy, the RBA says it’s growing at a moderate rate, and is expected to pick up gradually in the next 2 years.
The Reserve Bank also noted commodity prices have recently picked up (despite substantial declines in previous years), and this has helped to increase Australia’s terms of trade.
Labour market indicators continue to remain mixed – with a fall in the unemployment rate, but a slowdown in overall employment growth. However, the RBA believes there will be continued employment expansion in the near term.
Taking these factors into account, plus the fact there have already been rate cuts in May and August, the RBA concluded that keeping rates unchanged for now is consistent with sustainable economic growth and achieving the inflation target over time.
The Aussie dollar rose slightly to $US0.7645 following the decision.
