Australia holds interest rate at 3.5%
Australia’s central bank kept interest rates unchanged at a developed-world high, citing a domestic expansion that's weathering a global slowdown.
The local currency touched the strongest in 4 1/2 months.
Governor Glenn Stevens and his board left the overnight cash-rate target at a 2 1/2-year low of 3.5 per cent for a second month, the Reserve Bank of Australia said in a statement today in Sydney.
Policy makers lowered rates by 1.25 percentage points from November to June, leaving borrowing costs "a little below their medium-term averages," Mr Stevens said today.
"While it is too soon to see the full impact of those changes, dwelling prices have firmed a little over the past couple of months, and business credit has over the past six months recorded its strongest growth for several years," he said.
"The exchange rate, however, has remained high, despite the observed decline in the terms of trade and the weaker global outlook."
The Australian dollar has risen 8.6 per cent since the RBA's last rate reduction on June 5, extending gains that have helped keep core inflation at the lower end of the central bank's 2 per cent to 3 per cent target.
While Europe's fiscal crisis is weighing on global growth and Chinese demand for Australian commodities, Mr Stevens's 75 basis points of cuts in May and June helped boost retail sales and housing in an economy driven by resource investment.