RBA leaves cash rate unchanged

The cash rate remained unchanged at 3.5 per cent yesterday at the Reserve Bank's monetary policy meeting, following a spate of rate cuts in the past eight months.

According to Reserve Bank Governor, Glenn Stevens, the decision was motivated by stronger than expected global and local conditions, with world economic growth picking up in early 2012.

Despite weak conditions in Europe and slower growth in China, the United States and other parts of Asia are on a road to recovery; and locally, on-target inflation, improved credit growth and low unemployment have influenced Australia's economic position. Lowered inflation is also brought about by declining commodity prices and a peaking of terms of trade, although they still remain at high levels.

"There has been a material easing in monetary policy over the past six months. At today's meeting, the Board judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate," said Mr Stevens.

However, Mr Stevens also acknowledged that the exchange rate remained high and that credit growth was still "modest".

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