Australia keeps interest rate unchanged at 7.25%. | CountingPips Forex & Currency Trading Blog

July 1, 2008 - Forex Economic News

Australia keeps interest rate unchanged at 7.25%.

The Reserve Bank of Australia kept its official cash lending rate unchanged today at 7.25 percent for the fourth month in a row amid inflation concerns and a slowing economy. Australia had raised its interest rate by 25 basis points in each of February and March and has increased its rate four times since August 2007. Australia's cash rate is at its highest level since 1996 when it stood as high as 7.50 percent. The RBA is combating inflation rates that have exceeded the RBA's inflation target of 2 to 3 percent and the nation's economy is showing signs of slowdown due to inflation and a "tightening in financial conditions", according to the RBA. Today's interest rate hold was widely expected by market forecasts and economists.

Australia's Glenn Stevens, Governor of Monetary Policy, commenting on inflation in the report said, "Inflation is likely to remain relatively high in the short term, and the CPI will be further boosted in coming quarters by the recent rises in global oil prices. Looking further ahead, inflation in both CPI and underlying terms should decline over time, provided demand continues to evolve as expected."

The Australian dollar has fallen in forex trading against most major currencies today. The AUD/USD pair, after touching a 25-year high yesterday, has dropped over a hundred pips from yesterday and looks to be heading below 0.9500.

Tags: interest rate, aud, australia

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