The Reserve Bank of Australia has held the official interest rate for the third consecutive month, citing close to trend growth, inflation and lending rates.
RBA governor Glenn Stevens said the decision to hold rates at 4.25 percent, as analysts widely tipped, came as a result of recent figures suggesting the world economy will grow at a below-pace trend this year, but that we’re not facing a deep downturn.
“Several countries in Europe will record very weak outcomes, but the US economy is continuing a moderate expansion. Growth in China has moderated, as was intended, and is likely to remain at a more measured and sustainable pace in the future,” he said.
The board did note the pace of output growth is sitting slightly lower than estimated, but said it has chosen to wait for upcoming data on prices to reassess the inflation outlook before it considers easing the official interest rate again.
“In underlying terms, inflation was around 2½ percent in 2011. CPI inflation was higher than that but will fall over the next quarter or two. It is currently expected that inflation will be in the 2–3 percent range over the coming one to two years,” it said.
SMBs will now watch moves made by lending providers in the wake of today’s decision, as many have historically moved to increase their interest rates, despite no change being made to the official rate.
