Australia Leaves Cash Rate Unchanged at 1.50%

• Australia Leaves Cash Rate Unchanged at 1.50%

The Reserve Bank of Australia on Tuesday left the key interest rate unchanged at 1.50 percent following the continued improvement in the global economy.

According to the Central Bank, business and consumer confidence have both picked up in recent months. Even though uncertainties remain, growth is expected above current trend in a number of advanced economies.

However, the apex bank stated that the rapid increase in Chinese borrowing and high spending on infrastructure mean that the medium-term risks to Chinese growth remain. But that the expansion in global economy has contributed to surged in commodity prices, which are providing a significant support to Australia’s national income.

While consumer prices remain low, with growth in labour costs remaining subdued, underlying inflation is likely to stay low for some time.

Indicators have shown the labour market is mixed and in considerable variation with employment data. However, employment rate has been steady at around 5.8 percent throughout the last year. The forward-looking indicators point to continued expansion in employment over the period ahead.

Also, the low-interest rates continued to support economic outlook. While the low foreign exchange rate since 2013 has helped cushion the economy in its transition following the mining investment boom.

The apex bank explained that a higher exchange rate would complicate current progress.