[mserve id=”Central_Bank_RBA.jpg” align=”left” width=”450″ caption=”Reserve Bank of Australia” alt=”Reserve Bank of Australia RBA” title=”Reserve Bank of Australia”] Australia’s central bank has surprised the markets by keeping interest rates on hold at 3.75%.
Most analysts had been expecting rates to rise to 4%, and news of the rate freeze sent the value of the Australian dollar falling.
Australia has largely escaped the worst effects of the banking crisis, and the Reserve Bank of Australia has raised rates three times since October.
However, the central bank hinted that more rate rises may be needed.
“If economic conditions evolve broadly as expected, the board considers it likely that monetary policy will, over time, need to be adjusted further in order to ensure that inflation remains consistent with the target over the medium term,” said Reserve Bank of Australia (RBA) governor Glenn Stevens.
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