The Reserve Bank of Australia (RBA) has again held interest rates at 4.75 percent today, citing continued global economic uncertainty as behind its decision.
According to Governor Glenn Stevens, conditions in global financial markets have continued to be unsettled, with uncertainty increasing about both the prospects for resolution of the sovereign debt and banking problems in Europe, and the outlook for global economic growth.
“Moreover, the uncertainty and financial volatility have reduced confidence, which could result in more cautious behaviour by firms and households in major countries.”
Stevens noted that local financial conditions have eased somewhat, thanks to increased competition bringing down some housing and business loans, but not enough for the bank to deem the current cash rate inappropriate.
“The exchange rate has also declined from the very high levels of a few months ago. Credit growth remains low, however, and asset prices have declined.”
It said revised data has shown inflation is rising at a pace less sharp than initially indicated, and that with “labour market conditions now a little softer and households more concerned about the possibility of unemployment rising, the likelihood of a significant acceleration in labour costs outside the resources and related sectors is lessening.”
The RBA hasn’t raised the cash rate since November last year.