Reserve Bank of Australia reiterates stable outlook for interest rates

Governor of the Reserve Bank of Australia Glenn Stevens

The Reserve Bank of Australia kept the cash rate unchanged at 2.5 percent and reiterated that a "period of stability" in interest rates is warranted given the outlook for inflation.

Governor Glenn Stevens released a statement that was little changed from what he said on July 1, although this time he noted an increase in inflation, which he attributed to an Australian dollar that has fallen from its highs of last year. That had been somewhat offset by slower wages growth, he said. The Australian dollar rose to 93.39 US cents after the statement from 93.22 cents immediately before. It was as high as US$1.056 in April last year.

"Recent data showed an increase in inflation, with both headline and underlying measures affected by the decline in the exchange rate last year," Stevens said. "But growth in wages has declined noticeably and is expected to remain relatively modest over the period ahead, which should keep inflation consistent with the target even with lower levels of the exchange rate."

Australia's consumer price index rose 0.8 percent in the second quarter, based on the trimmed mean gauge, for an annual 2.9 percent on that basis, beating estimates and sending the dollar higher on the day it was released last month. Stevens repeated that the exchange rate was still high by historical standards, given the the decline in the prices of export commodities, and would provide "less assistance than it might in achieving balanced growth in the economy."

He reiterated that the global economy is growing at a moderate pace, with China's growth generally in line with policymakers' objectives. He repeated that overall financial conditions remain very accommodative.

Stevens also reiterated that while there has been some improvement in labour market indicators this year, "it will probably be some time yet before unemployment declined consistently."

(BusinessDesk)

This article is tagged with the following keywords. Find out more about My Tags

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7888 0.0028 0.36%
AUD 0.9082 -0.0034 -0.37%
EUR 0.6356 0.0090 1.44%
GBP 0.5033 0.0023 0.46%
HKD 6.1198 0.0234 0.38%
JPY 92.6580 -0.2840 -0.31%

Commods

Commodity Price Change Time
Gold Index 1193.4 10.750 2014-11-20T00:
Oil Brent 78.7 -0.130 2014-11-20T00:
Oil Nymex 75.8 1.270 2014-11-20T00:
Silver Index 16.1 -0.150 2014-11-20T00:

Indices

Symbol Open High Last %
NZX 50 5526.9 5526.9 5526.9 -0.56%
NASDAQ 4751.0 4751.6 4701.9 0.53%
DAX 9521.2 9729.2 9484.0 2.57%
DJI 17677.3 17720.4 17685.7 0.19%
FTSE 6678.9 6773.1 6678.9 1.13%
HKSE 23353.7 23508.0 23349.6 0.37%
NI225 17285.7 17381.6 17300.9 0.33%