Australia's central bank left interest rates unchanged for a record 16th meeting as a resurgent currency threatens to hurt exporters and further compress inflation.
Reserve Bank of Australia chief Philip Lowe kept the cash rate unchanged at 1.5 percent Tuesday -- in line with market pricing and economists’ forecasts. The governor is cutting an increasingly isolated figure in the developed world as counterparts either consider or start to remove stimulus in response to an upswing in global economic growth.
“The low level of interest rates is continuing to support the Australian economy,” Lowe said in a statement. “Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual.”
The Australian dollar traded at 78.62 U.S. cents at 2:36 p.m. from 78.72 prior to the release.
The RBA board, facing recession-level wage rises and record household debt, has sought to be a stabilizing force as the economy adjusts to a services-driven expansion. That’s shown signs of success as firms have begun investing and boosting hiring. But the currency’s 5 percent rebound since early December is a potential hurdle to returning growth to average and inflation to target.
“We continue to see a more challenging year ahead for the Australian consumer and another sub-par year for wider economic growth,” Matthew Hassan, a senior economist at Westpac Banking Corp., said ahead of the decision. “Policy will remain firmly on hold.”