Interest rates unchanged

Once again the Reserve Bank of Australia has opted to leave the cash rate unchanged at 2.5 per cent this month, while it observes the effects of previous cuts.

In a statement announcing the decision, Reserve Bank Governor Glenn Stevens said that the economy has been growing ‘a bit below trend’ over the past year and is likely to continue this way in the near term as mining investment wanes.

“There has been an improvement in indicators of household and business sentiment recently, though it is too soon to judge how persistent this will be”, Governor Stevens said.

He pointed out that while the easing in monetary policy since late 2011 has supported ‘interest-sensitive spending’, the full effects are still coming through, and will continue to for a while yet.

“The pace of borrowing has remained relatively subdued to date, though recently there have been signs of increased demand for finance by households”, he added.

The statement concluded that the Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target.