Reserve Bank of Australia leaves cash rate unchanged at 2.5%

The Reserve Bank of Australia on Tuesday announced its decision to leave the cash rate unchanged at 2.5 percent. The decision was widely expected by economists, with most predicting no change at the Melbourne Cup Day board meeting. The RBA last lowered the cash rate in August by 25 basis points to a record low of 2.5 percent. In a statement released on Tuesday, RBA Governor Glenn Stevens said the economic growth in Australia had been growing a bit below trend over the past year and the unemployment rate had slightly gone up. "This is likely to persist in the near term, as the economy adjusts to lower levels of mining investment," he said. "Further ahead, private demand outside the mining sector is expected to increase at a faster pace, though considerable uncertainty surrounds this outlook." The RBA started cutting interest rates since late 2011, and Stevens said the easing in monetary policy had supported interest- sensitive spending and house prices. Stevens said the Australian dollar was still "uncomfortably high", although it was below its level earlier in the year. "A lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy," he noted. "At today's meeting, the Board judged that the setting of monetary policy remained appropriate. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target."