RBA Leaves Interest Rates On Hold, Questions Value Of The Aussie Dollar

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The Reserve Bank of Australia has left official interest rates on hold at 2.5% as expected.

Glenn Stevens’ statement accompanying statement also reiterated that “the most prudent course is likely to be a period of stability in interest rates.”

The statement was a little bit more aggressive on the currency, saying:

“The exchange rate, on the other hand, remains above most estimates of its fundamental value, particularly given the declines in key commodity prices. It is offering less assistance than would normally be expected in achieving balanced growth in the economy.”

There’s a warning to all workers on wages, nothing that wages growth “has declined noticeably and is expected to remain relatively modest over the period ahead”. This, the RBA notes, “should keep inflation consistent with the target even with lower levels of the exchange rate.”

On the transition in the economy, the bank noted that mining “investment spending is starting to decline significantly” and that investment “intentions in some other sectors continue to improve, though these areas of capital spending are expected to see only moderate growth in the near term. Investment intentions in some other sectors continue to improve, though these areas of capital spending are expected to see only moderate growth in the near term.”

The full statement’s here.

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