SYDNEY: Australia’s central bank Tuesday held interest rates steady at an all-time low of 1.75 percent, with uncertainty about the Brexit impact and inflation outlook making it “prudent” to stay on hold.
The Reserve Bank of Australia cut the official cash rate from 2.0 percent in May but has not moved since, with governor Glenn Stevens keen to see how the economy reacts to recent events. “Financial markets have been volatile recently as investors have re-priced assets after the UK referendum. But most markets have continued to function effectively,” he said in a statement.
“Any effects of the referendum outcome on global economic activity remain to be seen and, outside the effects on the UK economy itself, may be hard to discern.” Most economists expected the central bank to hold fire given Britain’s decision to exit the European Union and weekend elections in Australia where a winner has yet to be announced, although Stevens made no mention of domestic politics.
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