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 volatility in financial markets has abated recently, with long-term interest rates remaining low and ample funding available for creditworthy borrowers.
He says Australia’s economy has been growing a bit below trend over the past year, with unemployment edging higher. That is expected to continue as it adjusts to a drop off in mining investment.
Mr Stevens says further ahead, private demand outside the mining sector is expected to increase at a faster pace, though there’s considerable uncertainty around this outlook.
He says even though the Australian dollar has dropped recently, it still remains uncomfortably high. The Aussie spiked on the interest rate decision news but has since steadied. At 2.35pm it was valued at 90.81 US cents.
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.
