RBA Leaves Rates On Hold
August 3rd 2010
The Reserve Bank of Australia (RBA) has left the cash rate on hold at 4.5 per cent for the third consecutive month.
The central bank's decision follows weaker-than-expected consumer price index figures, released last week, which showed a surprise fall in underlying inflation.
RBA governor Glenn Stevens said the bank judged its current monetary policy setting to be appropriate, given the outlook for on-trend domestic growth amid an uncertain global outlook.
He also noted the inflation figures had been consistent with the RBA's May forecasts.
"Through to mid 2011, underlying inflation is likely to be in the top half of the target zone, while CPI inflation will probably be just above 3 per cent for a few quarters due to the impact of the tax changes and increases in utilities prices," Mr Stevens said in a statement released after the central bank's board meeting.
Mr Stevens said caution in financial markets had abated recently, aided by the release of European bank stress test results.
"Nonetheless, the global outlook remains somewhat more uncertain than a few months ago and this is reflected in the volatility of financial prices," he said.
"Commodity prices are off their peaks but those most important for Australia remain at very high levels, and the terms of trade are around their peak of two years ago."
source:businessspectator.com.au
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