RBA says further easing possible
(9 May 2013 – Australia) Low inflation has given the Reserve Bank of Australia (RBA) more scope to ease rates to support demand.
RBA governor Glenn Stevens said 'further decline in the cash rate was appropriate to encourage sustainable growth in the economy', as the central bank lowered rates by 25 basis points to 2.75 percent on Tuesday.
The RBA decision came after a spate of soft economic data, which has called into question the strength of the housing recovery, while pointing to a rising unemployment rate, continued weakness in the manufacturing sector and slow private credit sector growth.
The RBA's board members signalled in previous statements and speeches their concern about the high dollar despite the decline in export prices and interest rates.
Tuesday's statement put forward a stronger position, with Stevens pointing out that the exchange rate ''has been little changed at a historically high level over the past 18 months''.
Further easing could happen in a few months time, as the RBA said in its statement it only used some of its scope from low inflation to ease rates.
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