Investing.com - The Reserve Bank of Australia kept its cash rate at a record low 2.5% as expected following a board meeting on Tuesday and signalled that a prudent course looking forward would be "a period of stability in interest rates."
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"In the Board''s judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates," said Governor Glenn Stevens in a statement.
The central bank said slightly firmer consumer demand foreshadows a solid expansion in housing construction that along with improved business conditions and confidence are positives, but that waning resources investment and weak labor demand and wages offset those factors, setting the stage for a period of rate stability.
"Looking ahead, the Bank expects growth to remain below trend for a time yet and unemployment to rise further before it peaks," Stevens said.
"Beyond the short term, growth is expected to strengthen, helped by continued low interest rates and the lower exchange rate. Inflation is expected to be somewhat higher than forecast three months ago, but still consistent with the 2% to 3% target over the next two years."