Australian bank leaves key rates at record low

Sydney, Nov 3 (IANS) Australia’s central bank left the official rate at a record low of two percent for the seventh straight month on Tuesday — however, the door was wide open for further cuts if deemed appropriate.

Analysts were pricing a 30 to 40 percent chance of a Reserve Bank of Australia (RBA) rate cut, however “the board judged economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting”, Xinhua cited RBA governor Glenn Stevens as saying.

Unlike the bank’s October decision, Stevens left the door open to further monetary policy easing “should that be appropriate”.

“The Board will continue to assess the outlook, and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target,” he said.

Australia’s growth is currently below trend at two percent, while fears of increased retail rates from Australia’s “Big Four” banks threatened to tighten consumer-spending leading up into the crucial Christmas sales period.

Stevens said all available information suggested moderate expansion of Australia’s economy was continuing despite GDP being below longer-term averages while business surveys had indicated a gradual improvement in conditions.

Eyes now turn to the bank’s quarterly statement on monetary policy on Friday when it is expected the RBA will downgrade its inflation outlook and potentially lower its growth forecast.

The Australian dollar initially spiked to 72.04 US cents when the decision was announced, though it fell to 71.62 US cents as Stevens’ comments were digested.

At 3.23 p.m. (local time), the Australian dollar had gained ground to 72.03 US cents.

 

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