Australia’s central bank left the benchmark rate unchanged Tuesday, saying the economy has strengthened in recent months, but opened the door for more interest rate cuts.
Reserve Bank of Australia Governor Glenn Stevens said the cash rate was unchanged at a record-low 2%, saying the outlook for inflation may afford scope for additional policy easing, should that be suitable to support demand.
The RBA said GDP growth has been somewhat below longer-term averages for some period of time. But business surveys indicate a slow improvement in conditions over the previous year, accompanied by higher employment growth and stable unemployment rate.
Australia’s central bank reduced borrowing costs by 2.75 percentage points in late 2011 to boost industries outside of mining.
The easing bias is obvious. However, the onus is very much on the activity figures “to deteriorate for the bias to be acted upon,” said Su-Lin Ong, Head of Australian Economic and Fixed-income Strategy at Royal Bank of Canada.
The central bank is scheduled to update its projections for growth and inflation Friday.
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