Australian central bank leaves rates on hold

Canberra, March 1 (IANS) Australia’s central bankers have maintained their upbeat stance on the economy despite financial market volatility, leaving the official cash rate on hold at 2 percent for the 11th straight month, the media reported on Tuesday.

Reserve Bank of Australia (RBA) governor Glenn Stevens said there was reasonable possibility for growth in Australia’s economy, even if inflation is low but “close to target”.

“The board, therefore, decided that the current setting of monetary policy remained appropriate,” Stevens said.

The board maintained its conditional easing bias “should that be appropriate to lend support to demand” if inflation remains low, Xinhua news agency reported.

However, Commonwealth Bank of Australia chief economist Michael Blythe said there are a range of influences that suggest the hurdle for the RBA to cut interest rates remains quite high.

“The bank’s views on the global economy were not downgraded, the bank’s characterisation of financial market volatility was not changed and the bank still sees the non-mining economy strengthening and labour market conditions improving,” Blythe said.

The growth in the global economy is occurring at a “slightly lower pace than expected” and financial markets have recently exhibited “heightened volatility” with a diminishing risk appetite from “diverging policy settings among the major jurisdictions,” Stevens added.

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