The Reserve Bank of Australia decided to leave its cash rate as expected at its December meeting.
The monetary policy board maintained the cash rate at 2.50 percent. The rate has been at the current level since August 2013.
Policymakers said global financial conditions remain accommodative and long-term interest rates and risk spreads remain very low. As estimated earlier, inflation is running between 2 and 3 percent, with recent data confirming subdued rises in labor costs.
The bank also repeated that global economy is continuing to grow at a moderate pace. Especially China's growth has been panning out in line with policymakers' objectives. Also weakening property markets present a challenge in the near future, the bank added.
Due to the strengthening behavior of US dollar, the aussie has traded at lower level in recent times. Notwithstanding the recent weakness, the Australian dollar is still above most estimates of its fundamental value, especially when considered against the backdrop of falling commodity prices, the bank noted. A lower exchange rate is likely to be needed to achieve balanced growth in the economy, the RBA assessed.
Regarding the economy, most data are consistent with moderate growth in the economy. Resources sector investment spending is starting to decline significantly, while some other areas of private demand are seeing expansion at varying rates. For the next several quarters, the bank still expects growth to be a little below trend, the statement said.
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