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05 February 2014

RBA leaves rates on hold at record low

The Reserve Bank of Australia has left interest rates at 2.5 per cent - for now

The Reserve Bank of Australia has kept the cash rate at 2.5 per cent, highlighting an improved outlook for the local and overseas economies.

The decision was expected, with all 13 economists surveyed by AAP last week forecasting no change at the first RBA board meeting of the year.

The RBA last cut the cash rate in August 2013, by a quarter of a percentage point.


On present indications, the most prudent course is likely to be a period of stability in interest rates, RBA governor Glenn Stevens said in a statement accompanying the decision.

In the Board's judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target.


In the latter half of 2013 Mr Stevens on several occasions said the Australian dollar was uncomfortably high.

However, in recent weeks the Australian dollar has stayed below 90 US cents, which seemed to please the RBA governor.


The exchange rate has declined further, which, if sustained, will assist in achieving balanced growth in the economy, Mr Stevens said.

The RBA governor also said there is a good change that growth in the global economy should pick up this year.

The United States economy continues its expansion and the euro area has begun a recovery from recession, albeit a fragile one, Mr Stevens said.

Japan has recorded a significant pick-up in growth, while China's growth remains in line with policymakers' objectives. Commodity prices have declined from their peaks but in historical terms remain high.



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