The Reserve Bank of Australia (RBA) has retained the cash rate at 2.25%, despite the wide speculation of a rate cut today.
The central bank said in its statement that “financial conditions are very accommodative globally” and that in Australia, “growth in lending to investors in housing assets is stronger than to owner-occupiers”.
“Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities,” the official RBA statement said.
“The Bank is working with other regulators to assess and contain risks that may arise from the housing market. In other asset markets, prices for equities and commercial property have risen, in part as a result of declining long-term interest rates.”
However, the bank lamented that “prices for key Australian exports have also been falling and therefore Australia’s terms of trade are continuing to decline”.
Globally, the RBA also sees moderate economic growth in 2015 as the U.S. economy continues to strengthen.
“At today’s meeting the Board judged that it was appropriate to hold interest rates steady for the time being. Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target. The Board will continue to assess the case for such action at forthcoming meetings,” the RBA statement added.