Cash rate unchanged at March board meeting

The cash rate remained unchanged at three per cent at the Reserve Bank's board meeting today, with its governor Glenn Stevens citing a reduction in downside risks over recent months and on-target inflation rates as key reasons for the decision.

According to the bank's monetary policy decision, more positive global conditions has led to a reduction in downside risks. In particular, the United States is currently undergoing a moderate expansion, financial pressure is abating in Europe and growth in China is stabilising at a "fairly robust pace". 

Domestically, Australia experienced close-to-trend growth in 2012, driven by increased resources expenditure and exports as well as growth in private consumption and stable inflation. Inflation is expected to remain low at 2.25 per cent as businesses focus on productivity  under conditions of moderate demand growth.

"The Board's view is that with inflation likely to be consistent with the target, and with growth likely to be a little below trend over the coming year, an accommodative stance of monetary policy is appropriate. The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand," said the Reserve Bank.

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