SYDNEY (APP) – Australia’s central bank left interest rates unchanged at 2.25 percent on Tuesday, but suggested that further reductions could be on the cards to spur the economy.
The Reserve Bank of Australia last month cut rates for the first time in 18 months, dropping its cash rate by 25 basis points to a historic low of 2.25 percent.
“At today’s meeting the Board judged that, having eased monetary policy at the previous meeting, it was appropriate to hold interest rates steady for the time being,” governor Glenn Stevens said in a statement.
“Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target.”
The wait-and-see approach comes as a decade-long mining investment boom fades, with growth slowing, inflation low and unemployment at a more than 12-year high.
The RBA noted that commodity prices, such as for major exports iron ore and coal, had slumped in the past year, while growth in key market China was also apparently slowing.
Some had suggested that a fresh rate cut would further inflame the property market, with the RBA noting that dwelling prices continued to rise strongly in Sydney.
The Australian dollar, which has declined noticeably against a rising US dollar in recent months, rose after the announcement to 78.07 US cents from 77.69 cents.
Stevens said last month that the RBA was conscious that interest rate cuts could be less effective than in the past in summoning additional growth in demand.
The central bank has already cut forecasts for 2015 economic growth and inflation and warned unemployment will likely rise as the economy transitions away from a mining investment boom.
