Reserve Bank Leaves Rates On Hold

Posted on November 6th, 2013 · Posted in News

The Reserve Bank has left the official interest rate steady at the historic low of 2.5%.

The decision to leave the cash rate on hold for Melbourne Cup day was widely tipped by economists, given recent improvements in the unemployment rate, retail sales and building approvals.

In a statement, RBA governor Glenn Stevens said the economy was likely to keep growing at a slightly slower than average pace in the short term “as the economy adjusts to lower levels of mining investment”.  The RBA board took note of the rise in household and business confidence since the September federal election, but said it was still too early to tell “how persistent this will be”.

The bank says it will take a while for the full effects of the many rate cuts already delivered to show.  “Housing and equity markets have strengthened further, trends which should in time be supportive of investment,” Mr Stevens said.

Mr Stevens also described the exchange rate as still too high.  “The Australian dollar, while below its level earlier in the year, is still uncomfortably high,” he noted.  “A lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy.”  The dollar fell after the announcement and at 2:38pm (AEDT) it was buying 94.8 US cents.

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