The Reserve Bank of Australia (RBA) announced today that it will maintain the cash rate at 2.75%.
RBA Governor Glenn Stevens echoed previous statements that, "the easier financial conditions now in place will contribute to a strengthening of growth over time, consistent with achieving the inflation target."
According to him, this was the reason the Board decided that, "the stance of monetary policy remained appropriate for the time being. [It] also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand."
Mr Stevens also mentioned the current economic conditions in Australia, which, "has been growing a bit below trend over the recent period." He pointed to the lower mining investment, which has been the country's main economic driver in the past. In addition, the Governor also spoke about the rising unemployment rate and the moderation of the growth in labour costs.
Meanwhile, Mr Stevens also spoke about the increased demand for finance by households despite the generally subdued pace of borrowing in the country.
There was also mention about the Australian dollar as he did with previous statements. The Governor said that the aussie has depreciated by 10 percent since early April, "although it remains at a high level." He mentioned the possibility of the exchange rate depreciating further in the future as well. This would, "help to foster a rebalancing of growth in the economy."
On a global level, Mr Stevens said that the, "financial conditions remain very accommodative." He added that, "a reassessment by the market of the outlook for monetary policy in the United States has seen a noticeable rise in sovereign bond yields from exceptionally low levels. Volatility in financial markets has increased and there has been some widening of credit spreads."
The RBA previously cut cash rates by 25bps in May, bringing the rate to its lowest level since the RBA began setting monetary policy. Analysts still expect another round of 25bps cut within the year, which could bring down the rate further to 2.5%.