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Australian central bank holds rates at record-low 2.5 percent

SYDNEY--Australia's central bank held its cash rate steady at a record low of 2.50 percent Tuesday and hinted at a prolonged pause, saying a period of interest rate stability was prudent as the mining boom unwinds.

Reserve Bank of Australia (RBA) governor Glenn Stevens said the board had decided to leave interest rates on hold for a fifth consecutive month, as expected by analysts.

Despite inflation coming in at a stronger-than-expected 0.8 percent in the final three months of 2013, indicating a pick-up in consumer spending, Stevens said growth and labor market prospects remained shaky as Australia's decade-long Asia mining investment boom began to decline.

“Information becoming available over the summer suggests slightly firmer consumer demand and foreshadows a solid expansion in housing construction. Some indicators of business conditions and confidence have shown improvement,” he said.

“At the same time, with resources sector investment spending set to decline significantly, considerable structural change occurring and lingering uncertainty in some areas of the business community, near-term prospects for business investment remain subdued.”

Looking ahead, Stevens said the RBA expected “growth to remain below trend for a time yet and unemployment to rise further before it peaks.”

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