Reserve Bank Leaves Interest Rates Unchanged

The Reserve Bank of Australia has left interest rates unchanged after its monthly board meeting today.

The cash rate stays at 2.5%.

It is the first decision on interest rates under the Abbott government.

Statement from Glenn Stevens, Governor of the Reserve Bank of Australia.

At its meeting today, the Board decided to leave the cash rate unchanged at 2.5 per cent.

Recent information is consistent with global growth running a bit below average this year, with reasonable prospects of a pick-up next year. Commodity prices have declined from their peaks, but generally remain at high levels by historical standards. Inflation in most countries remains well contained.

Overall, global financial conditions remain very accommodative. Changes in the outlook for US monetary policy have increased volatility in financial markets, but long-term interest rates remain very low and there is ample funding available for creditworthy borrowers.

In Australia, the economy has been growing a bit below trend over the past year. This is expected to continue in the near term as the economy adjusts to lower levels of mining investment. The unemployment rate has edged higher. There has been an improvement in indicators of household and business sentiment recently, though it is too soon to judge how persistent this will be. Inflation has been consistent with the medium-term target. With growth in labour costs moderating, this is expected to remain the case over the next one to two years, even with the effects of the lower exchange rate.

The easing in monetary policy since late 2011 has supported interest-sensitive spending and asset values. The full effects of these decisions are still coming through, and will be for a while yet. The pace of borrowing has remained relatively subdued to date, though recently there have been signs of increased demand for finance by households. There is also continuing evidence of a shift in savers’ behaviour in response to declining returns on low-risk assets.

The Australian dollar rose recently, but is still about 10 per cent below its level in April. A lower level of the currency than seen at present would assist in rebalancing growth in the economy.

At today’s meeting, the Board judged that the setting of monetary policy remained appropriate. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target.


Bowen And Hockey Debate The Economy At National Press Club

Treasurer Chris Bowen and Shadow Treasurer Joe Hockey have debated the economy at the National Press Club today.

With just ten days until the September 7 election, Bowen and Hockey traversed much-travelled ground on the budget deficit, the national debt and the Opposition’s policy costings.

  • Listen to the Bowen-Hockey debate (59m)

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Bowen And Hockey Spar Over Interest Rate Decision

The Treasurer, Chris Bowen, has defended today’s interest rate decision by the Reserve Bank, whilst the shadow Treasurer, Joe Hockey, says the economy is weakening.

At a press conference following the Bank’s decision to cut the cash rate by 25 basis points to 2.5%, Bowen said lower interest rates contributed to lower living costs for Australians, particularly in housing. [Read more...]


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The Rudd government has released an updated economic outlook statement that shows this year’s budget deficit blowing out to $30.1 billion.

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Kevin Rudd’s National Press Club Address: The Australian Economy In Transition

Prime Minister Kevin Rudd addressed the National Press Club in Canberra today.

Rudd’s speech centred on depicting the Australian economy as strong and its difficulties as small by comparison with the rest of the world.

He reiterated his previous statements that the China boom is over and emphasised the economy’s transition to a new investment phase. He argued that ongoing productivity improvement is vital and attacked the negativity of Opposition Leader Tony Abbott.

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  • Listen to Rudd take questions (33m)

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  • Watch Rudd’s speech (29m)
  • Watch Rudd’s graphs:

Official transcript of Prime Minister Kevin Rudd’s Address to the National Press Club.

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