RBA keeps rates steady at 4.5%

The Reserve Bank has kept the official interest rate steady at 4.5%.

In a statement released by RBA governor Glenn Stevens, he said the board decided to keep the official interest rate at 4.5% due to concerns over economic recovery.

“Since the Board last met, concerns about sovereign creditworthiness in several European countries have been a focus of financial markets. Investors have generally displayed a good deal more caution.”

“As a result, equity prices have fallen and long-term government bond rates have declined outside of the countries most affected by the sovereign concerns. The Australian dollar fell sharply as part of this adjustment. Commodity prices have also softened, though those important for Australia remain at very high levels.”

Additionally, Stevens said the effects of these factors on the economy will need to remain under review, and that global growth is still expected to be at about trend pace in 2010.

“Conditions in Europe overall have been relatively weak, and the foreshadowed budgetary tightening will probably mean that this will continue, but growth is becoming more established in North America. In Asia, growth has continued to be quite strong and may need to moderate in the year ahead.”

Stevens said that as a result of actions at previous meetings, interest rates are now at their average levels consistent with the past decade.

“Taking all the available information into account, the Board views this setting of monetary policy as appropriate for the near-term.”

This could indicate another pause next month.