Given the fall in the exchange rate of the Australian dollar over the past month, it came as no surprise that the Reserve Bank Board decided to leave the cash rate unchanged at 2.75 per cent this week.
In a statement announcing the decision, Reserve Bank Governor Glenn Stevens noted that while the dollar has depreciated by around 10 per cent since early April, it nevertheless ‘remains at a high level’.
“It is possible that the exchange rate will depreciate further over time, which would help to foster a re-balancing of growth in the economy”, Governor Stevens said.
The Board has again left the door open to further cuts in interest rates, ‘should that be required to support demand’.