Australian central bank keeps rates low for now
May 7, 2014, 12:05 am TWN
SYDNEY--Australia's central bank on Tuesday kept interest rates at a record low 2.5 percent, citing only tentative improvement in non-mining sectors of the economy.
The Reserve Bank of Australia foreshadowed a period of stability in the cash rate, in a statement whose wording was little changed from the previous month.
The bank last cut rates in August in a bid to support the economy as a decade-long mining investment boom slows down.
“In the board's judgment, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target,” it said.
The Australian dollar rose to 93.12 US cents after the widely expected decision, from 92.82 cents immediately before.
Last month, the Australian Bureau of Statistics said consumer prices rose 0.6 percent in January-March from the previous three months, when it climbed 0.8 percent.
In the year to March prices rose 2.9 percent, still within the central bank's 2.0-3.0 percent target.
On Tuesday, bank governor Glenn Stevens said recent information suggested “moderate growth” was occurring in consumer demand and forecast strong expansion in housing construction.
Public spending was expected to be “subdued” while the bank said “it will probably be some time yet before unemployment declines consistently.”
Unemployment came in at 5.8 percent in March, unexpectedly down on the previous month.
Commonwealth Bank chief economist Michael Blythe said while the statement changed little from the previous month, there were some subtle differences.
Westpac Bank economist Bill Evans said he expected rates to be on hold until the second half of 2015, although this view is in the minority with most forecasters predicting a hike by early next year.