Reserve Bank keeps interest rate unchanged at 2.75%

The Reserve Bank has kept the official interest rate unchanged at 2.75%, in line with economists’ expectations.

In a statement, governor Glenn Stevens said volatility in financial markets has increased, and noted that recent national accounts confirmed the economy has been growing “a bit below trend”.

“The unemployment rate has edged higher over the past year and growth in labour costs has moderated.”

“Inflation has been consistent with the medium-term target and is expected to remain so over the next one to two years, notwithstanding the effects of the recent depreciation of the exchange rate.”

Stevens also noted the depreciation in the dollar, saying that if the exchange rate continues to fall this could assist a “rebalancing of growth”.

Easier financial conditions will contribute to strengthening growth over time, Stevens said, leading the board to decide the current stance of monetary policy was sufficient.

“The Board also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand.”