The Reserve Bank of Australia on Tuesday decided to retain the cash rate unchanged at 3 percent for a third consecutive time as downside risks to global economic outlook receded and domestic consumption showed signs of moderate recovery.
The central bank, however, stuck to its view that the current inflation outlook provided room to ease policy further. The decision was in line with economists' forecast.
In a statement released after the meeting, Governor Glenn Stevens said "the inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand."
He said that inflation is likely to be consistent with the 2-3 percent target. With growth likely to be a little below trend over the coming year, an accommodative stance of monetary policy is appropriate, Stevens said.
He said global growth is expected to be a little below average for a time, but the downside risks appear to have reduced. While Europe remained in recession, the US economy is experiencing a moderate expansion. At the same time, growth in Asia is showing signs of stabilization, Stevens noted.
At today's policy meeting, the Reserve Bank Board judged that it was "prudent" to leave the policy rate unchanged. The central bank has reduced the cash rate six times since late 2011.
Stevens pointed out that the "substantial" easing of monetary policy during late 2011 and 2012 is having an expansionary effect on the economy. The Board expects further such effects to emerge over time.
The central bank reiterated that the peak in resource investment is drawing close and therefore, there will be more scope for some other areas of demand to strengthen.
Indicators pointed to moderate growth in private consumption spending, though it is unlikely for spending to return to the very strong growth of some years ago. Public spending, in contrast, is forecast to be constrained, the Board observed.
Investment outside the resources sector is set to remain relatively subdued in the near term, but a modest increase is likely to begin over the next year. Dwelling investment is slowly increasing, Stevens said.
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May 01, 2026 15:54 ET Central banks dominated the economics news flow this week with almost all major ones announcing their latest policy decisions and many boosted expectations for a rate hike in June. In other news, several countries released the preliminary data for first quarter economic growth. In the U.S., comments by Fed Chair Jerome Powell were also in focus as his term ends this month.