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Australia Holds Rates as Currency Eases Commodity Price Rout

Australia left interest rates unchanged Tuesday after the local dollar recorded the biggest drop among major currencies last quarter, cushioning the impact of lower commodity prices and a weaker outlook in key trading partner China.

In a largely unchanged statement, Reserve Bank of Australia Governor Glenn Stevens and his board kept the cash rate at a record-low 2 percent, as predicted by markets and economists, following reductions in May and February. The currency dropped almost 9 percent in the June-September period.

Stevens reiterated that there had been “some further softening in conditions in China and east Asia of late” and that the “Australian dollar is adjusting to the significant declines in key commodity prices.”

Australia has so far had little success in stimulating industries with rate cuts outside of real estate as a decade-long mining investment boom unwinds. Businesses plan to cut investment by 23 percent this fiscal year as firms decide they can meet demand from heavily indebted households with existing capacity.


Firmly On Hold

contd.
www.bloomberg.com/news/articles/2015-10-06/australia-holds-rate-as-currency-eases-china-led-commodity-rout