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Reserve Bank Keeps Rates at 2.25%

By Laura Anderson

The Reserve Bank keeping rates on hold for the second month in a row.

While experts are confident of another rate cut this year, most predicted the RBA to hold steady in April.

The decision to hold the cash rate steady at a record 2.25% keeps the way clear for a possible cut in the first week of May, just before Treasurer Joe Hockey hands down his second budget on May 12.

“At today’s meeting the Board judged that it was appropriate to hold interest rates steady for the time being,” Reserve Bank Governor Glenn Stevens says.

“Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target. The Board will continue to assess the case for such action at forthcoming meetings.”

Stevens notes the US economy continues to strengthen as China’s economic growth slows and says globally, financial conditions are accommodative.

“In Australia the available information suggests that growth is continuing at a below-trend pace, with overall domestic demand growth quite weak as business capital expenditure falls.

“As a result, the unemployment rate has gradually moved higher over the past year. The economy is likely to be operating with a degree of spare capacity for some time yet. With growth in labour costs subdued, it appears likely that inflation will remain consistent with the target over the next one to two years, even with a lower exchange rate.”

Information supplied by www.realestate.com.au

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