The Reserve Bank of Australia (RBA) has held the cash rate at 3.50 percent today, as inflation and growth remain close to trend for the second month in a row.
According to RBA governor Glenn Stevens, previous decisions mean monetary policy is “easier” now than it was for most of 2011. Housing prices have firmed and business credit rates have recorded their strongest growth over the past six months for several years.
“At today’s meeting, the Board judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate,” he said.
Growth in China has moderated and continues in the US at a modest pace. While Europe remains the region of greatest economic weakness, Stevens said financial markets have responded positively to signs of progress made by policymakers in the area.
“Low appetite for risk has seen long-term interest rates faced by highly rated sovereigns, including Australia, decline to exceptionally low levels,” Stevens added.
The RBA said it would be watching for any impact the carbon tax may have on inflation over the next two quarters, though it does expect it will remain close to target over the next couple of years.
The RBA last lowered the official cash rate in June.
