Reserve Bank leaves rate at 3 percent

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

Governor Glenn Stevens says the stabilisation of the global economy has influenced their decision, although the Australian economy continues to contract.

“Capacity utilisation has fallen back to about average levels, and will decline further over the rest of the year. With demand for labour weakening, growth in labour costs is beginning to fall. These conditions are likely to see inflation continue to abate over the next two years,” said Stevens.

Keeping the current rate instead of dropping it will give the Bank some buffer, he added: “The prospect of inflation declining over the medium term suggests that scope remains for some further easing of monetary policy, if needed. In assessing how it might use that scope, the Board will continue to monitor how economic and financial conditions unfold, and how they impinge on prospects for a sustainable recovery in economic activity.”

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