Reserve Bank of Australia Maintains Cash Rate at 4.75%

The Reserve Bank of Australia (RBA) maintained the cash rate unchanged at 4.75%.  The RBA said: "the Board judged that the current mildly restrictive stance of monetary policy remained appropriate".  The RBA also noted: "Year-ended CPI inflation is likely to remain elevated in the near term due to the extreme weather events earlier in the year.  However, as the temporary price shocks dissipate, CPI inflation is expected to be close to target over the next 12 months."

The Bank also held the cash rate unchanged at 4.75% at its previous meeting in June this year, it last increased the interest rate by 25 basis points in November last year.  Australia reported annual consumer price inflation of 3.3% in Q1 this year, up from 2.7% in the December quarter of 2010, and just outside the Bank's inflation target of 2-3%.  The Australian economy shrank -1.2% during the March quarter due to the impact of natural disasters; placing year on year GDP growth at a slower pace of 1.2%.

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