(7 July 2009 – Australia) On the back of RBA optimism, Australia’s official cash rate has been left unchanged for the third consecutive month.The quarter of unchanged rates, with the last decrease in back in April this year, leaves the cash rate at 3 percent, the lowest level since 1960.
In summarising key global conditions this year, the RBA said that after a sharp contraction in demand during the December and March quarters, the global economy is stabilising.
Also, downside risks to the outlook have diminished, with conditions in global financial markets improving this year and action to strengthen balance sheets of key financial institutions under way.
Growth in China has also strengthened considerably, which is having an impact on other economies in the region, including Australia, the RBA said.
Despite tough credit conditions globally, weakening economic conditions in Europe and sluggish output in Australia, the RBA decided that fiscal and monetary policy that is already in place is sufficient for the time being.
With that said, the board’s view is that the outlook for inflation allows some scope for further easing of monetary policy, if needed.
In assessing how it might use that scope, the RBA will continue to monitor how economic and financial conditions unfold and how they impinge on prospects for a sustainable recovery in economic activity.