The Reserve Bank of Australia (RBA) has elected to keep the cash rate steady at 4.75% at a board meeting today.
Rates have been on hold since November of last year, meaning it is the sixth successive freeze.
Glenn Stevens, Governor of the RBA, pointed to strong growth in the Asian region, despite the nuclear disaster in Japan, as having an impact on the decision.
He also explained that commodity prices had softened a little and in general, financial conditions for the global economy remain accommodative.
“Australia’s terms of trade are reaching very high levels and national income has been growing strongly. Private investment is picking up, led by very large capital spending programs in the resources sector, in response to high levels of commodity prices,” wrote Stevens in a statement.
“Outside the resources sector, investment intentions have been revised lower recently. In the household sector thus far, there continues to be a degree of caution in spending and borrowing and a higher rate of saving out of current income. The impetus from earlier Australian Government spending programs is now also abating, as had been intended.”
Stevens also talked of the sharp fall in gross domestic product in the March quarter, as a result of floods and cyclones last summer. He confirmed the Treasurer’s report that the resumption of coal production in flooded mines is taking longer than initially expected, but production levels are now increasing again.
“Growth in employment has moderated over recent months and the unemployment rate has been little changed, near 5 per cent. Most leading indicators suggest that this slower pace of employment growth is likely to continue in the near term. Reports of skills shortages remain confined, at this point, to the resources and related sectors. After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn,” added Stevens.
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