The Reserve Bank of Australia (RBA) has moved in line with expectations and kept Australia’s official cash rate unchanged at a record low of 2.5 per cent.
RBA Governor Glenn Stevens says overall global financial conditions remain very accommodative.
Mr Stevens says changes in the outlook for US monetary policy have increased volatility in financial markets, but interest rates remain low and funding is available for borrowers.
He says Australia’s economy has been growing a bit below trend over the past year and that is expected to continue as it adjusts to a drop off in mining investment.
While maintaining the monetary policy stance is appropriate for the time being, the Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target.
The Australian dollar jumped to the day’s high on the news and at 2.35pm AEST was trading at 93.7 US cents. In his commentary, Mr Stevens noted the dollar rose recently but has depreciated by around 10 per cent since early April.
FNN spoke to FIIG Securities Chief Economist Dr Stephen Nash, who says the decision was expected.
