RBA leaves interest rates at 4.75%
The Reserve Bank of Australia has announced it will leave the cash rate unchanged at 4.75 percent this month.
Governor Glenn Stevens said current circumstances made it appropriate to exert a degree of restraint with monetary policy. ”The board judged it was prudent to maintain the current setting of monetary policy, particularly in view of the acute sense of uncertainty in global financial markets over recent weeks.”
Despite tremors in the global economy as concerns grow over the public finances of Europe and the United States, the Australian economy remains strong, Stevens said.
National income continues to grow and Australia’s terms of trade are at historically high levels. However, Stevens identified low consumer spending and the high exchange rate have had a dampening impact on some sectors.
The flow-on effects from the cyclones and flooding in Queensland are still being felt, with year-end CPI inflation high. While predicting inflation will decline over the next two quarters, Stevens indicated the Board remains concerned about the medium-term outlook for inflation, which suggests a rate rise might be imminent.
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