(5 September 2012 – Australia) The Reserve Bank of Australia (RBA) left interest rates unchanged at 3.5 percent for the third month in a row.Although it was largely expected, it was thought recent signs of a fading mining boom may have had an impact on Tuesday’s decision.
In recent weeks, BHP Billiton has announced delays to projects worth some A$40 billion while Fortescue Metals, the nation’s third-largest miner, today unveiled job cuts and project delays as it adjusts to tumbling prices for its iron ore.
In a statement, RBA governor Glenn Stevens highlighted the positive contribution to the economy from the mining sector.
‘In Australia, most indicators available for this meeting suggest growth has been running close to trend, led by very large increases in capital spending in the resources sector,’ Stevens said in the statement.
‘Consumption growth was also quite firm in the first half of the year, though some of that strength was temporary.’
The bank, though, noted that some of the commodity fizz is coming off the economy. Iron ore prices are now just half the levels of a year ago, according to a Chinese gauge.
‘Some commodity prices of importance to Australia have fallen sharply in recent weeks,’ the RBA statement said.
‘The terms of trade (measuring the relative prices of exports to imports) peaked a year ago and have declined significantly since then, though they remain historically high.’