Once again, the Reserve Bank has opted to leave interest rates unchanged for another month.
In a statement announcing the Bank’s decision, Governor Glenn Stevens pointed to increasing stability on the global economy as well as improvements in the domestic one.
“Risk spreads have narrowed and funding conditions for financial institutions are more favourable”, Governor Stevens said.
“In Australia, most indicators available for this meeting suggest that growth was close to trend over 2012, led by very large increases in capital spending in the resources sector, while some other sectors experienced weaker conditions.
“Looking ahead, the peak in resource investment is approaching”, he said, adding that as it does, there will be “more scope for some other areas of demand to strengthen”.
“Dwelling investment appears to be slowly increasing, with higher dwelling prices and rental yields”, Governor Stevens noted.
The Bank's assessment remains that inflation will be consistent with the target over the next one to two years, but Governor Stevens hinted that interest rates could drop further if needed.
“The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand”, he concluded.