Glenn Stevens’ statement from the March Reserve Bank meeting:
“At its meeting today, the Board decided to leave the cash rate unchanged at 2.5 per cent.
Why did the RBA leave the cash rate at 2.5%?
1. There seems to be slow economic growth in the global economy, as the US is slowly expanding, the Euro has began a slow recovery, Japan has recorded a pick up in growth and China’s growth seems consistent with their plans and policies. For us in Australia, the commodity prices remain high, so this will help us grow as well.
2. Our Financial markets are looking pretty good, as our long term interest rates are low, and the Equity and Credit markets have reserves to provide adequate funding to the Australian market.
3. In Australia, we have signs that there is expansion in the housing construction sector. And Exports are rising, and perceptions are positive that both business and housing sectors are on the rise.
4. With dwelling prices increasing significantly over the past year, the decline in the exchange rate seen to date will assist in achieving balanced growth in the economy.
In conclusion, The Reserve Bank expects unemployment to rise further before it peaks. Over time, growth is expected to strengthen, helped by continued low interest rates and the lower exchange rate. Inflation is expected to be consistent with the 2–3 per cent target over the next two years.