Reserve Bank leaves cash rate at 3 percent

The Reserve Bank has left Australia’s cash rate unchanged at three percent following their monthly meeting this afternoon.

RBA governor Glenn Stevens recognised that while the global economy has stabilised since the contraction experienced in the December 2008 and March 2009 quarters, and downside risks have been reduced, the Australian economy is still experiencing tight credit conditions.

“The Board’s current view is that the outlook for inflation allows some scope for further easing of monetary policy, if needed,” he said of the decision to maintain the rate for the third consecutive month.

Stevens acknowledged that economic conditions in Australia have not been as weak as expected, “but output has been sluggish and capacity utilisation has fallen back to about average levels, with some further decline likely over the rest of the year”.

He added: “Weaker demand for labour is leading to lower growth in labour costs. These conditions should see inflation continue to abate over the period ahead.”

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