By Central Bank News
The Reserve Bank of Australia (RBA) left its benchmark cash rate unchanged at 3.50 percent, as expected, after already cutting rates by half a percentage point earlier this year.
“At today’s meeting, the Board judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate,” the governor of the Australian central bank, Glenn Stevens, said in a statement.
Stevens noted that financial markets had responded positively to last week’s agreement by European leaders but added that “Europe will remain a potential source of adverse shocks for some time.”
He also said that Australia’s economy in the first quarter had expanded at a pace somewhat stronger than earlier indicated but there had not been any change in the bank’s outlook for inflation, which is expected to remain consistent with its target over the coming one to two years.
Australia’s inflation rate (consumer price index) fell to an annual rate of 1.6 percent in the March quarter from 3.1 percent in the December quarter. The RBA’s target is to keep inflation in a target band of two to three percent over the medium term.
The economy in the March quarter expanded by 1.3 percent from the December quarter for an annual rise of 4.3 percent.