Reserve Bank keeps interest rate unchanged at 3.5%

The Reserve Bank has kept the official interest rate unchanged at 3.5% this morning, as economists anticipated, saying the international outlook is more subdued.

The move comes largely as expected, with analysts having said the RBA would stay on the sidelines until official inflation data is released later this month. It has cut 75 basis points from the official rate in the past two months.

In a statement, governor Glenn Stevens said financial markets have responded to signs of further progress in Europe, but that it will still remain a “potential source of adverse shocks for some time”.

Domestically, the RBA said the economy continued to grow in the first part of the year, even stronger than anticipated.

But with an inflation outlook still unchanged, a subdued environment in Europe and a stable economy, the RBA said the current rate setting “remained appropriate”.