The board of the Reserve Bank of Australia (RBA) decided to leave the cash rate unchanged at 2.5 per cent.
The bank believes that financial conditions overall remain very accommodative. Long-term interest rates and risk spreads remain very low and volatility in many financial prices is currently unusually low. Markets appear to be attaching a very low probability to any rise in global interest rates or other adverse event over the period ahead.
Amongst others, the RBA assesses that the labour market has a degree of spare capacity and that it will probably be some time yet before unemployment declines consistently. Also, growth in wages has declined noticeably and is expected to remain relatively modest over the period ahead, which should keep inflation consistent with the target even with lower levels of the exchange rate.
Source: RBA