Australia’s central bank keeps interest rate at record low 2.5 percent

Nathan Andrada – Fourth Estate Cooperative Contributor

Sydney, Australia (4E) – The Reserve Bank of Australia (RBA) kept the benchmark interest rate unchanged at a record low, matching economists’ predictions, as a weakening currency helps export industries and boosting an economy trying to adjust from a resource-investment led boom.

RBA Governor Glenn Stevens and his board decided to maintain the overnight cash-rate target at 2.5 percent, according to the central bank statement released Tuesday in Sydney. The move was anticipated by all 30 economists in a Bloomberg News survey. The markets also had priced in an RBA decision to keep the rates steady.

Mr. Stevens said there is still uncertainty about the economic growth outside of the mining sector, according to a statement released after Tuesday’s RBA board meeting.

Economists had predicted the economy will grow 2.5 percent in the third quarter from a year ago, ahead of release of data Wednesday. The estimate matches the slowest pace in two years. The Treasury also predicts the jobless rate to climb 6.25 percent in 2014. The unemployment rate in October stood at 5.7 percent.

RBA officials continue to express concerns about the impact of stubbornly strong Australian dollar to the economy. Economists, however, predict that the RBA will raise the cash rate in late 2014 amid modest improvements in Australian economic data.

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