Australian Monetary Policy meeting led by Governor Glenn Stevens decides to leave the cash rate unchanged at 2.0 percent.
According to the statement, the global economy is expanding at a reasonable pace but commodity prices are much lower compared with a year ago. The low commodity prices were attributed to increase in supply even from Australia.
The statement further confirmed that Australia’s terms of trade are falling, though Federal Reserve is expected to start increasing its policy rate later this year, other central banks are still implementing policy easing programs to support their economy and create more jobs.
Economic data from the U.S has shown continuous growth of the global financial market, the very reason why investors are expecting a rate hike in September after a notable surge in the inflation rate from 1.7 percent to 2 percent.
The overall global economic outlook remains favorable despite a market rout in China and economic uncertainty in Greece, long term borrowing rates for most creditworthy private borrowers and sovereigns remain remarkably low.
In Australia, the economy is growing even though the rate of growth has been fairly below longer-term averages. The available information suggests that there is somewhat stronger growth of employment and a stable unemployment rate over the past year, overall the economy is likely to be functioning in a sustainable capacity for some time.
The statement also stated, “that domestic inflationary pressures have been contained, hence inflation forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate”.
Australian currency gained 0.5 percent after the report was released.