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Reserve Bank leaves cash rate at 4.75% due to strong economy

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Reserve Bank leaves cash rate at 4.75% due to strong economy  article image
The Reserve Bank (RBA) has left the cash rate unchanged at 4.75 percent. RBA governor Glenn Stevens said the decision was based on strong growth in the global economy, particularly in Asia. In his statement, Stevens said the Reserve Bank would continue its "mildly restrictive stance of monetary policy" as the general macroeconomic outlook was strong. While the Bank expects Japanese production will decline dramatically following recent natural disasters, Stevens predicted the decline will not significantly impact the wider Asian region. Stevens also credited Australia’s high terms of trade and growing national income as contributing factors to the decision to keep the rates unchanged. The RBA announced its decision before the Australian Bureau of Statistics revealed Australia’s terms of trade shrank dramatically in February, recording a trade deficit for the first time in 12 months. Rising commodity prices have helped boost the Australian economy while driving consumer inflation in other parts of the world. While exports are down and outputs from resource-rich states Queensland and Western Australia have diminished in the face of January’s natural disasters, Stevens said production levels should recover within months.

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