Reserve Bank of Australia leaves cash rates at 4.75 pct

The Reserve Bank of Australia (RBA) on Tuesday announced it keeps official interest rates on hold for the seventh straight month, as recent economic data showed many areas of the economy are struggling.

The RBA's overnight cash rate target remains at 4.75 percent, and the last time it has a rate rise was November last year.

Only five out of 28 analysts surveyed by Bloomberg thought it is unlikely the RBA would lift rates in June, following the Bureau of Statistics' gross domestic product figures showed Australia's economy shrank 1.2 percent in the first three months of the year.

According to RBA governor Glenn Stevens, the summer floods and cyclones had reduced output in some key sectors.

"Growth in employment has moderated over recent months and the unemployment rate has been little changed, near five percent," Stevens said in a statement released on Tuesday.

"After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn."

Stevens said interest rates are at "mildly restrictive" levels and are appropriate, although the bank will continue to monitor changes in inflation and economic growth in future months.

"CPI inflation has risen over the past year, reflecting the effects of extreme weather and rises in utilities prices, with lower prices for traded goods providing some offset," he said.

"The weather-affected prices should fall back later in the year, though substantial rises in utilities prices are still occurring.

"The bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the next 12 months."

Many economists are expecting the RBA to move the official cash rate higher before September, as an expected surge in mining investment puts upward pressure on inflation.

Meanwhile, National Retail Association executive director Gary Black welcomed Tuesday's decision, saying that it helps retailers who are struggling with subdued trading and online overseas shopping.

Source: Xinhua

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