RBA leaves rates unchanged. Dollar heads upwards.

The Australian dollar climbed sharply last week after the RBA left interest rates on hold and indicated it is unlikely to cut rates in the near future.

As predicted by the majority of economists, the Reserve Bank kept the benchmark cash-rate target at 3 per cent, a low previously reached in the aftermath of the global financial crisis.

Earlier, government data showed retail sales rose in January at their fastest pace in seven months promoting thought that already near-record-low interest rates are driving a recovery in spending and housing.

At 4.30pm AEDT, last Tuesday the Aussie bought $US1.0243 from $US1.0123 late in local trade yesterday. It traded as high as $US1.0245 in Asia. It is currently buying $US 1.0209, lower due to a strengthening US dollar, on the back of better than expected US jobs data on Friday.

RBA governor Glenn Stevens cited a modest improvement in non-mining parts of Australia’s economy and increasing ease about conditions in Europe and China. Still, low inflation would keep the door open to further rate cuts should the economy slow unexpectedly, the RBA said.

Source: The Australian

Troy Phillips

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