Sharechat Logo

Australia's central bank keeps rates on hold, ‘uncomfortably high' currency falls after statement

Tuesday 5th November 2013

Text too small?

The Reserve Bank of Australia kept its cash rate unchanged as expected while noting that its currency is "uncomfortably high". The Australian dollar fell against the greenback and the kiwi after the statement.

Governor Glenn Stevens delivered a statement broadly similar to his announcement on Oct. 1 while noting changes overseas and in the domestic economy and giving added emphasis to the strong Australian dollar.

"The Australian dollar, while below its level earlier in the year, is still uncomfortably high," Stevens said. "A lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy." In last month's statement he only noted that the currency "rose recently."

The Australian dollar fell to 94.80 US cents after the statement from 94.98 cents immediately before. The kiwi dollar climbed to 87.21 Australian cents from 86.98 cents.

Stevens also revised his take on financial markets, saying in the latest statement that volatility "has abated recently" compared to his wording on Oct. 1 that volatility had increased because of changes in the outlook for US monetary policy.

While repeating that unemployment had edged higher he added that a high jobless rate was "likely to persist in the near term." He also added a new expectation, that private demand outside of the mining sector was "expected to increase at a faster pace" though with the outlook uncertain.

The latest statement also notes that public spending "is forecast to be quite weak," suggesting Australia's new government has been in power long enough for the central bank to make a judgement call about policy. Stevens also said housing and equity markets "have strengthened further, trends which should in time be supportive of investment."

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar rises as US-China trade, Brexit tensions ease
SkyCity shares hit 7-week low as fire encapsulates convention centre
Wrightson showcases Fruitfed Supplies as horticulture stands out
Fonterra rivals fear dairy giant will get leg up from law overhaul
Wellington Drive remains in the black as it raises operating forecast
OMV plans further maintenance at Pohokura
Sky continues sports drive with extension to netball rights
Apple's asset-shuffling puts $270m value on PowerbyProxi
Fonterra lifts payout forecast on improving global dairy prices
22nd October 2019 Morning Report

IRG See IRG research reports