Australia continues to put brakes on rate hikes

The Reserve Bank of Australia (RBA) has again elected to leave interest rates on hold at 4.5% after a series of aggressive rate hikes since October.

It is the third consecutive month in which rates have been at this level but economists say the central bank will only leave rates on hold for the short-term.

Australia was the first economy to raise rates from a 50-year low as the economic downturn eased. Other major economies opted for lower interest rates to boost their economies.

The country is one of the few developed economies not to have fallen into recession like its counterparts throughout the world as it has benefited from an increase in commodity prices, while exports have received a boost due to demand from China for its iron ore and other raw materials.

Meanwhile, commenting on today’s decision, RBA Governor Glenn Stevens said: “With growth likely to be close to trend, inflation close to target and the global outlook remaining somewhat uncertain, the Board judged this setting of monetary policy to be appropriate.”

Mr Stevens has previously expressed concern about the global economic recovery and last month revised the annual economic growth forecast from 3.25% to 3% as a result.

“Nonetheless, the global outlook remains somewhat more uncertain than a few months ago and this is reflected in the volatility of financial prices,” Mr Stevens said in a statement today.

Discuss this in the Finance Markets forums

Story link: Australia continues to put brakes on rate hikes