RBA leaves rates unchanged
The Reserve Bank of Australia (RBA) has kept interest rates on hold at 2.5% following its November meeting.
Announcing that rates would not be changed, RBA governor Glenn Stevens said that most data in Australia was consistent with moderate growth in the economy.
“Overall, the bank still expects growth to be a little below trend for the next several quarters,” Mr Stevens said.
The decision to leave rates on hold was widely expected from most economists.
Mr Stevens said that credit growth was moderate overall, but there had been a further pick up in lending to property investors, and that dwelling prices had continued to rise.
Furthermore, he noted that interest rates were very low and had continued to edge lower over the past year as competition to lend had increased.
Mr Stevens said some forward indicators had showed that employment had been firming throughout the year, however the labour market had a “degree of spare capacity” and that it would probably be some time yet before unemployment declines consistently.
He reiterated that resource sector spending was declining as some areas of private demand were expanding, albeit at varying rates, and public spending would remain subdued.
“On present indications, the most prudent course is likely to be a period of stability in interest rates,” Mr Stevens said, noting that inflation was running between 2% to 3%, as expected.