- POSTED: 01 Oct 2013 14:15
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Australia's central bank held interest rates at their record 2.50 per cent low Tuesday, adopting a wait-and-see approach as the dollar adjusts and earlier cuts boost confidence.
SYDNEY: Australia's central bank held interest rates at their record 2.50 per cent low Tuesday, adopting a wait-and-see approach as the dollar adjusts and earlier cuts boost confidence.
The Reserve Bank of Australia kept rates on pause for a second consecutive month, as expected, after a series of cuts designed to stimulate the economy as its decade-long Asia mining splurge cools.
Governor Glenn Stevens said the bank's board judged "the setting of monetary policy remained appropriate" at its monthly meeting for October, with the full effects of earlier moves "still coming through, and will be for a while yet".
"The economy has been growing a bit below trend over the past year. This is expected to continue in the near term as the economy adjusts to lower levels of mining investment," Stevens said.
"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."
Stevens said the Australian dollar was about 10 per cent lower than it had been in April but "a lower level of the currency than seen at present would assist in rebalancing growth in the economy".
The dollar bounced to 93.74 US cents from 93.30 cents prior to the rates announcement, which was seen as favouring a hiking rather than cutting bias.
"With the Australian economy showing signs of life (in) house prices, home sales, PMI (manufacturing), confidence and maybe retail, I think we have seen the low for rates," said AMP Capital economist Shane Oliver.