Canberra, Australia (4E) – Reserve Bank of Australia’s (RBA) benchmark interest rate remained unchanged as the nation tackles the challenges of adjusting to the end of a mining boom.
Australia’s central bank maintained its benchmark cash-rate target at 2.5 percent, as policy makers believe more time is needed for the low borrowing rates to boost the domestic economy as China’s slowing growth reduces demand for commodity exports and holds back investments in the mining industry.
Since November last year, the RBA has made eight rates cuts in an effort to spur consumer spending to help cushion the transition pains to an economy less dependent on mining and contain a possible rise in unemployment as resource projects slow down.
The central bank’s easing cycle in the past two years is starting to show signs that it has stimulated some parts of the economy. The RP Data-Rismark home value index, which gauges home prices, jumped 5.3 percent in eight major Australian cities in the 12 months through Aug. 31. Home prices in Sydney posted its biggest quarterly gain since April 2009, the measure showed.
RBA Governor Glenn Stevens said there are favorable financial conditions worldwide despite concerns over tapering by U.S. Federal Reserve of its monetary stimulus that has helped drive both economies in recent years.