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Australia Retains Record Low Interest Rate

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Australia's central bank maintained its interest rate on Tuesday, as policymakers see gradual progress in inflation reaching target.

The board of the Reserve Bank of Australia, governed by Philip Lowe, decided to leave the cash rate unchanged at a record 0.75 percent.

The central bank had lowered the rate by 25 basis points in October 2019, which was the third such reduction this year.

"With interest rates having already been reduced to a very low level and recognising the long and variable lags in the transmission of monetary policy, the Board decided to hold the cash rate steady at this meeting," the bank said in a statement.

The bank said the interest rates are set to remain low for an extended period so as to reach full employment and achieve the inflation target.

It remains prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time, the bank added.

The board noted that easing of monetary policy last year is supporting employment and income growth in Australia and a return of inflation to the medium-term target range.

Moreover, the lower cash rate has put downward pressure on the exchange rate, which is supporting activity across a range of industries, the board observed. Lower interest rates also assisted with the process of household balance sheet adjustment.

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