Australia left its key interest rate unchanged and omitted a reference to the need for the local dollar to fall further. The currency jumped more than half a U.S. cent in response. Central bank 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.
Stevens said in Tuesday’s statement the exchange rate “is adjusting to the significant declines in key commodity prices” after it fell through 73 U.S. cents last month. It is the first time since March 2014 that he hasn’t indicated the currency was too high.
Australia has so far had little success in stimulating industries as a decade-long mining investment boom unwinds. Businesses plan to cut investment in the next 12 months by the most on record as firms decide they can meet demand with existing capacity amid weak wage gains.