RBA keeps cash rate at 2 per cent at August meeting
The Reserve Bank of Australia’s decision to keep the cash rate steady at 2 per cent for the third month in a row has heightened expectation it will not cut again in the current cycle.
Despite the Tuesday decision being widely expected, the Australian dollar surged almost US1¢ to about US73.80¢, its highest point for almost a fortnight.
Currency traders are betting that RBA governor Glenn Stevens will leave the cash rate at this point, and is happy with the support the Aussie’s current level is giving exporters and import-imposed businesses.
RBA governor Glenn Stevens is expected to leave the cash rate at 2 per cent in the current cycle.
A lower dollar means cheaper exports and more expensive imports, a situation which makes Australian companies more globally competitive. This has been central to the country’s transition from a reliance on mining-related investment towards a more balanced growth model.
In one of the few differences between the August and July statements regarding the rate decision, Mr Stevens dropped the reference to the need for “further depreciation” in the local unit, replacing it with “the Australian dollar is adjusting to the significant decline in key commodity prices”.
Analysts cautioned the currency would continue to fluctuate in line with commodity prices.
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