Reserve Bank holds rate at 3 percent

Following the monthly meeting of the Reserve Bank, RBA governor Glenn Stevens announced that they would keep the cash rate at the current three percent.

“With considerable economic stimulus in train around the world, the global economy is stabilising after an earlier sharp contraction in demand,” he explained. “Downside risks to the global outlook have diminished, though they have not disappeared and most observers expect only modest growth overall.”

Stevens noted that mixed conditions around the world contributed to the Bank’s decision, including the weakening of Europe contrasting against the growth of China. “There is tentative evidence that the US economy is approaching a turning point,” he added.

While financial sentiment has improved, “credit conditions remain difficult, and the effects of economic weakness on asset quality present a challenge,” said Stevens.

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