Australia left its key interest rate unchanged at a record low and was coy about whether further cuts would be needed to boost growth, sending the currency higher. Central bank Governor Glenn Stevens and his board left the cash rate at 2 percent in Sydney Tuesday, as predicted by traders and economists. “Monetary policy needs to be accommodative” as the economy is likely to operate with spare capacity “for some time yet,” he said in a statement.
Australia has so far had little success in stimulating industries as a decade-long mining investment boom winds down. 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 growth.
“They’re kind of in a wait-and-see mode,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney. “I wouldn’t say there’s a clear easing bias but we know from the forecasts that it is probably more implicit.”