Australia Central Bank Holds Rates as Economy Charges Ahead

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Australias central bank left its cash rate at record lows on Tuesday and reiterated its lowerforlonger policy stance even as data showed the countrys economic output was above its prepandemic level and house prices were shooting through the roof.

The Reserve Bank of Australia RBA left its policy settings at 0.1 for a sixth straight meeting, awaiting inflation and wage pressures, in a decision that was widely expected by economists in a Reuters poll. AUINT

The local dollar briefly stumbled to 0.7740 from a oneweek high of 0.7769 reached earlier in the day as the RBA wrongfooted some market participants who were expecting a hawkish tilt in the central banks statement, in line with its New Zealand counterpart.

The Reserve Bank of New Zealand RBNZ last week hinted at the end to a pandemicera, ultraloose monetary policy, leading some to believe the RBA would venture on that path too.

Governor Philip Lowe instead justified the need for nearzero rates despite a strong economic recovery by saying inflation and wage pressures are subdued and a pickup in prices is expected to be only gradual and modest.

An important ongoing source of uncertainty is the possibility of significant outbreaks of the virus, Lowe added.

Australias secondmost populous state of Victoria plunged into a lockdown last week after the state reported its first locally transmitted coronavirus cases in nearly three months.

The RBA also repeated it will not raise interest rates until inflation was…

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