Australia holds rates steady at record low
THE Australian central bank yesterday held interest rates steady at a record low of 1.5 percent, as it waits for more information on inflation pressures before its next move.
Rates have been cut twice in the past four months, including by 25 basis points in August, in a bid to boost sluggish inflation as the economy transitions toward nonresources growth.
Figures in July showed inflation fell to a 17-year low of 1pc in April-June, well off the target of 2-3pc.
Last month’s rate cut is expected to take some time to feed through to possibly pushing up consumer prices, with the RBA’s own forecasts in May expecting inflation to only lift in late 2017 or in 2018.
Most economists expected the central bank to hold fire to see what impact the earlier cuts were having and outgoing RBA governor Glenn Stevens said the current cash rate was appropriate.
Mr Stevens, in his last statement as governor before handing over to his deputy Philip Lowe, added that “inflation remains quite low”.
Australia has been growing more strongly than most of the world’s advanced economies but is struggling to kickstart inflation with global trade tepid.
The Australian dollar, which moved slightly higher in the leadup to the announcement, was steady immediately after the decision at 76.22 US cents. –