Official interest rate held at 4.75%
The Reserve Bank of Australia (RBA) chose to keep the official cash rate at 4.75 per cent today (February 1st) after highlighting the impact of low inflation and the Queensland floods on the country's economy.
Setting out the central bank's reasons for the decision, RBA governor Glenn Stevens said that the net additional demand from rebuilding after the floods was unlikely to have a major impact on "the medium-term outlook for inflation".
He added that the bank expected inflation to remain within its target band of two to three per cent over the coming year.
Responding to the announcement, HSBC chief economist Paul Bloxham suggested interest rates would not rise until the full impact of the Queensland disaster was understood.
"Setting rates involve looking forward at what is happening in the economy," he told news.com.au.
"The floods have increased uncertainty, we don't have any data that post dates the floods as yet and in that uncertain environment it isn't likely that the central bank would move interest rates."
The RBA last lifted the official cash rate in November 2010.
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