RBA leaves cash rate unchanged

Submitted 8/07/2009

AAP

 

 

The Reserve Bank of Australia (RBA) has opted to leave the cash rate unchanged for a third straight month, but is keeping the door open for a cut later this year.

As widely anticipated by economists, the central bank left the cash rate at a 49-year low of 3.0 per cent after its monthly board meeting today.

"The board's current view is that the outlook for inflation allows some scope for further easing of monetary policy, if needed," RBA governor Glenn Stevens said in a statement.

"In assessing how it might use that scope, the board will continue to monitor how economic and financial conditions unfold and how they impinge on prospects for a sustainable recovery in economic activity."

The RBA cut the cash rate by a hefty 425 basis points between September 2008 and April in a pre-emptive strike to cushion the economy from the impact of the worst global recession in 75 years.

Data since the last board meeting suggests households are becoming more comfortable about the outlook, aided by low interest rates and cash handouts from the Government.

But businesses conditions remain depressed in a difficult global environment.

Cost cutting is expected to keep upward pressure on the jobless rate, which the Federal Government is forecasting to touch 8.25 per cent by the middle of next year.

Labour force data for June are released on Thursday.

Economists' forecasts centre on the unemployment rate rising to a six-year high of 5.9 per cent after 5.7 per cent in May.