Interest rates remain unchanged


The Reserve Bank has left interest rates unchanged amid renewed signs of global economic weakness.

The central bank's decision today to keep its key cash rate at 4.5 per cent interrupts  a series of three rises in as many months. It also comes on the back of a month of turmoil on global financial markets.

Worries about a worsening debt crisis in Europe saw Australian stocks in May fall 8 per cent. The monthly shares slide was the worst since the global financial crisis, greatly reducing the risk of a rate rise by the Reserve Bank of Australia (RBA).

Since October, when rates were at half-century lows, the RBA has lifted the official interest rate six times in a bid to discourage excessive spending as the economy rebounded from last year's slowdown. Those rate hikes have added approximately $300 on to the average monthly payment for a typical 25-year, $300,000 mortgage.

The Australian dollar remained almost unchanged after the RBA's verdict, trading recently at 83.75 US cents, from 83.64 US cents just prior to the announcement.

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