RBA Feels Currency Overrated: Keeps Record Low Benchmark Rate
The Reserve Bank of Australia (RBA) maintained a record low key interest rate to prop up growth and said that an overrated currency is resulting in a hindrance to the mining investment transactions of the economy.
After a board meeting Governor Glenn Stevens, in a statement said that overnight cash rate target was being kept at 2.5 percent.
He said that the Australian dollar "remains above most estimates of its fundamental value, particularly given the declines in key commodity prices. It is offering less assistance than would normally be expected in achieving balanced growth in the economy."
The RBA is making an effort to promote the growth of domestic markets which also include construction of residential buildings. It is also taking this action to support the hiring of mine workers and prevent a gap in growth that is likely to come up as soon as the boom in resource investment die away. The growth has been burdened by a slack in spending by firms and the strapping Australian dollar which this year has been one of the best performing currencies in the group of ten.
After the boards earlier meeting the jobless rate spiked to 6.4 percent for July as compared to 6 percent seen in June. That was a twelve year high. Yester data from the statistics bureau showed that the profits of companies in Australia fell 6.9 percent during the second quarter from as compared to the earlier three months. This was the biggest quarterly set back seen after 2009 second quarter.
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