Interest rate stays at 3 percent
(06 February 2013 – Australia) The Reserve Bank of Australia (RBA) has decided to keep interest rates on hold at its first board meeting of the year, leaving it at its historic low of 3 percent.
''The board judged that it was prudent to leave the cash rate unchanged,'' RBA governor Glenn Stevens said in the statement.
But he added that, with annual inflation currently within its target band of 2 to 3 percent, the RBA had room to cut the cash rate further if needed.
''The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand,'' he said.
''The board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target over time.''
Stevens said the full impact of the four interest rate cuts in 2012 would take more time to become apparent.
''There are early indications of a pick-up in dwelling construction; and savers are starting to shift portfolios towards assets offering higher expected returns,'' he said.
''On the other hand, the exchange rate remains higher than might have been expected, given the observed decline in export prices, and the demand for credit is low, as some households and firms continue to seek lower debt levels.''
But he added that, with annual inflation currently within its target band of 2 to 3 percent, the RBA had room to cut the cash rate further if needed.
''The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand,'' he said.
''The board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target over time.''
Stevens said the full impact of the four interest rate cuts in 2012 would take more time to become apparent.
''There are early indications of a pick-up in dwelling construction; and savers are starting to shift portfolios towards assets offering higher expected returns,'' he said.
''On the other hand, the exchange rate remains higher than might have been expected, given the observed decline in export prices, and the demand for credit is low, as some households and firms continue to seek lower debt levels.''
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