The Reserve Bank of Australia (RBA) has announced it has decided to leave the country’s official cash rate unchanged at 4.25 per cent.

 

In his statement on the decision, RBA Governor Glenn Stevens voiced cautious optimism regarding the world economy’s growth. While accepting the global economy will continue to grow at below-trend pace, he said there is no sign of an imminent downturn.

 

“Several European countries will record very weak outcomes, but the US economy is continuing a moderate expansion. Growth in China has moderated as was intended, but on most indicators remains quite robust overall,” Mr Stevens said in his statement.

 

Despite a softer than expected Asian economy, Mr Stevens said that there are no signs of further deterioration in the region. 

 

Mr Stevens highlighted the easing of financial pressures on European banks, saying that the actions of policymakers have put banks and soverigns onto a sound footing in the longer term.

 

The announcement comes as the CPI has fallen to the lower end of the RBA’s target band, recording an overall inflation rate of around 2.5 per cent.

 

“With growth expected to be close to trend and inflation close to target, the Board judged that the setting of monetary policy remained appropriate for the moment. Should demand conditions weaken materially, the inflation outlook would provide scope for easier monetary policy. The Board will continue to monitor information on economic and financial conditions and adjust the cash rate as necessary to foster sustainable growth and low inflation,” Mr Stevens concluded.