RBA keeps cash rate at record low, reiterates view Australian growth 'below trend'
The Reserve Bank of Australia kept its cash rate at a record low, where it has sat since August 2013.
The Reserve Bank of Australia kept its cash rate at a record low, where it has sat since August 2013.
The Reserve Bank of Australia kept its cash rate at a record low, where it has sat since August 2013, reiterating its view that the nation's growth will remain below trend, helping keep inflation tame.
The RBA kept the cash rate at 2.5 percent, repeating its statement of last month that monetary policy is "appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target."
"Overall, the bank still expects growth to be a little below trend for the next several quarters," governor Glenn Stevens said. "Recent data on prices confirmed that inflation is running between 2 and 3 percent, as expected, and this is likely to continue."
The Australian dollar recent traded at 87.24 US cents from 86.93 cents immediately before the statement. The New Zealand dollar fell to 88.70 Australian cents from 88.99 cents. The Reserve Bank of New Zealand has kept its official cash rate at 3.5 percent - 100 basis points more than the RBA's, since July, having increased the rate starting in March.
Stevens reiterated that growth in the global economy "is continuing at a moderate pace," with China's growth generally in line with policymaker objectives, although a weakening property market is presenting a short-term challenge. Overall, global financial conditions "remain very accommodative" and markets "still appear to be attaching a low probability to any rise in global interest rates or other adverse event over the period ahead."
Recent Australian economic data was "consistent with moderate growth in the economy." Resources sector investment spending was starting to decline significantly, while some other areas of private demand "are seeing expansion, at varying rates. Public spending is scheduled to be subdued."
Stevens noted that some forward indicators of employment have been firming, but he said the labour market still has enough spare capacity to ensure wage inflation remains modest.
He again noted that the Australian dollar has declined in the face of a strengthening greenback, while adding that the currency "remains above most estimates of its fundamental value, particularly given the further declines in key commodity prices in recent months. It is offering less assistance than would normally be expected in achieving balanced growth in the economy."
(BusinessDesk)