The Reserve Bank kept the official interest rate unchanged at 3% this afternoon, in line with economists’ expectations.
The move comes as many economists expect the RBA to take a “wait and see” approach with regard to the economy in the short term, with ongoing metrics of business and consumer sentiment remaining mixed.
In a statement, governor Glenn Stevens said global growth is forecast to be below average, but downside risks have lessened over recent months.
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He also pointed out Australian growth was close to trend over 2012, led by large increases in spending in the resources sector.
Present indications are that moderate growth in private consumption spending is occurring, though a return to the very strong growth of some years ago is unlikely.
The near-term outlook for non-residential building investment, and investment generally outside the resources sector, is relatively subdued, though recent data suggest some prospect of a modest increase during next financial year.”
Stevens also pointed out the softening labour market and slightly higher unemployment should keep a lid on labour costs.
“Moreover, businesses are focusing on lifting efficiency under conditions of moderate demand growth. These trends should help to keep inflation low, even as the effects on prices of the earlier exchange rate appreciation wane.”
With growth likely to be a little below trend in the next year, the RBA said the current monetary stance was appropriate.
“The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand.”