RBA notes global woes but leaves rate unchanged

THE central bank is keeping an open mind on a rate cut closer to year’s end, after it kept its finger off the interest rate button yesterday.

The Reserve Bank of Australia (RBA) left the cash rate at 3.5 per cent after its monthly board meeting – a decision expected by most economists.

RBA governor Glenn Stevens said the effects of rate cuts in May and June had yet to work their way through the economy.

‘‘As a result of . . . earlier decisions, interest rates for borrowers are a little below their medium-term averages,’’ Mr Stevens said.

‘‘The impact of those changes is still working its way through the economy, but dwelling prices have firmed a little and business credit has picked up this year.’’

Mr Stevens said the outlook for global economic growth had softened after a pick-up in the early months of 2012.

HSBC chief economist Paul Bloxham said the RBA’s view on the domestic economy was more hawkish than the market’s, and the central bank appeared unconvinced that Australia’s mining boom might be over.

Mr Bloxham said the RBA was satisfied with the current rate of inflation and economic growth, despite the worsening global outlook.

‘‘They still feel like they are ahead of the game a little, having cut rates earlier,’’ he said.