The Reserve Bank of Australia kept its benchmark cash rate at a record low as fiscal consolidation adds to a mining investment slowdown as a brake on growth.
The key rate was held at 2.5 percent for an 11th month, Governor Glenn Stevens and his board announced in Sydney today. The decision was predicted by all 29 economists surveyed by Bloomberg and markets had priced in almost no chance of a move.
Consumer confidence has been dented by spending cuts announced in Treasurer Joe Hockey’s May budget, which the central bank has flagged as a headwind for growth, along with a drop in resource investment. With a pickup in housing and resilient employment balancing the outlook, traders expect the RBA will remain sidelined this year, weighing the effect of its 2.25 percentage points of cuts from late 2011 to August 2013.
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