Rate stays at 3.75 percent
The Reserve Bank this afternoon announced its decision to keep the cash rate at 3.75 percent. Governor Glenn Stevens said economic conditions have been stronger than expected, and inflation has declined slightly due to lower commodity prices, a rise in the Australian dollar and a period of slower growth in demand. “Inflation is expected to be consistent with the target in 2010,” he said.
On the global front, Stevens recognised that although “world GDP is expected to rise at close to trend pace in 2010 and 2011″, the expansion would be “modest in the major countries, due to the continuing legacy of the financial crisis”.
“Global financial markets are functioning much better than they were a year ago,” noted Stevens, though added: “Credit conditions nonetheless remain difficult in the major countries as banks continue to face loan losses associated with the period of economic weakness.”
He singled out Asia for its robust financial sectors and quick recovery, but mentioned that some governments sought to withdraw government stimulus funding, particularly China.
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