Australia’s central bank said the currency’s direction will be important in setting policy and signaled further interest-rate cuts remain a possibility, according to minutes of its Aug. 6 meeting at which it reduced its benchmark rate to a record-low 2.5 percent.
“Regarding the communication of this decision, members agreed that the bank should neither close off the possibility of reducing rates further, nor signal an imminent intention to reduce rates further,” the Reserve Bank of Australia said in minutes of the meeting released in Sydney today. “The course of the exchange rate would be important.”
Governor Glenn Stevens and his board cut rates by 2.25 percentage points since late 2011 as growth slowed and unemployment rose. The Australian dollar, which declined 12 percent in the past six months, dropped as traders boosted bets on a rate reduction in December to more than 50 percent.