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, despite the US Federal Reserve beginning the process of curtailing stimulus.
Mr Stevens says inflation in the December quarter was higher than expected.
He says Australia’s economy has been growing a bit below trend over the past year, with a reasonable chance of a pick-up this year.
Commodity prices have declined from their peaks, but remain high in historical terms.
Mr Stevens says the demand for labour has remained weak and the rate of unemployment has edged higher.
He says the Australian dollar has continued to decline, which will assist in achieving balanced growth in the economy if sustained. The Aussie spiked as much as half a cent on the interest rate decision news. At 2.30pm it was valued at 88.05 US cents.
The board says on present indications, the most prudent course is likely to be a period of stability in interest rates.
FNN spoke to Commonwealth Bank of Australia
(ASX:CBA) Chief Economist Michael Blythe who said he was expecting the RBA to keep interest rates at record low levels.
