Australia's central bank on Tuesday maintained its main cash rate at a record low for a seventh successive month, and indicated a period of stability in monetary policy, as inflation pressures remained high.
The Reserve Bank of Australia, or RBA, kept the policy interest rate unchanged at 2.5 percent following its rate-setting meeting. The decision was in line with economists' expectations.
In a post-decision statement, Governor Glenn Stevens said that the monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target.
RBA forecasts inflation to be in line with its 2-3 percent target over the next two years. The bank expects unemployment to rise further before it peaks.
"If domestic costs remain contained, some moderation in the growth of prices for non-traded goods could be expected over time, which should keep inflation consistent with the target, even with lower levels of the exchange rate," Stevens noted.
The recent decline in the exchange rate could help achieving balanced growth in the economy, though the rate remains high by historical standards, the policymaker added.
The bank said it expects growth to strengthen over time, helped by continued low interest rates and the lower exchange rate.
The annual inflation rate advanced to 2.7 percent in the fourth quarter from 2.2 percent in the third quarter, nearing the upper end of the bank's target range. Sequentially, consumer prices rose 0.8 percent, after gaining 1.2 percent in the third quarter.
The RBA has reduced the cash rate by a cumulative 225 basis points since November 2011 to help the economy sustain demand in areas outside the resources sector in view of fading support from the mining boom.
The Australian economy expanded 0.6 percent sequentially in the third quarter of 2013, after recording similar growth in the June quarter.
Data came out earlier today showed that the number of building approvals issued in Australia jumped a seasonally adjusted 6.8 percent on month in January to 17,514, exceeding expectations.
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June 19, 2026 16:46 ET Major central banks continued to dominate the economic news flow this week too, led by the Federal Reserve, as they announced their latest policy decisions. The Federal Reserve policy session was in focus as it was the first to be led by the new chief Kevin Warsh. In Europe, central banks of the U.K. and Switzerland announced their rate decisions. In Asia, the Bank of Japan drew attention for its policy moves, while data out of China threw some light on the state of the economy.