RBS keeps interest rates at 2.0%04 August 2015 by News Desk
The Board of the Reserve Bank of Australia has decided to leave interest rates unchanged at 2.0%.
The RBA says that, while rates are expected to rise later this year, current conditions suggest there is no need to raise interest rates. Glenn Stevens, Governor of the Reserve Bank, said in statement: “The global economy is expanding at a moderate pace, but some key commodity prices are much lower than a year ago. Much of this trend appears to reflect increased supply, including from Australia.
“The US Federal Reserve is expected to start increasing its policy rate later this year, but some other major central banks are continuing to ease policy. Hence, global financial conditions remain very accommodative. Despite fluctuations in markets associated with developments in China and Greece, long-term borrowing rates for most sovereigns and creditworthy private borrowers remain remarkably low.
“In Australia, the economy has continued to grow. While the rate of growth has been below longer-term averages, it has been associated with stronger growth of employment and a steady rate of unemployment over the past year. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet. Domestic inflationary pressures have been contained. That should remain the case for some time, given the very slow growth in labour costs. Inflation is forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.
“In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with growth in lending to the housing market broadly steady over recent months. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities.
“The Bank is working with other regulators to assess and contain risks that may arise from the housing market. In other asset markets, prices for equities and commercial property have been supported by lower long-term interest rates. The Australian dollar is adjusting to the significant declines in key commodity prices.”