The Reserve Bank of Australia (RBA) maintained its benchmark monetary policy rate unchanged at 4.75%. The RBA said: "Most financial indicators suggest that monetary policy has been exerting a degree of restraint. Credit growth has declined over recent months and is very subdued by historical standards, even with evidence of greater willingness to lend. Most asset prices, including housing prices, have also softened. The exchange rate is high. Each of these variables is affected by other factors as well, but together they point to financial conditions being tighter than normal."
The Bank also kept the cash rate steady at 4.75% during its previous meeting in August this year, the RBA last increased the interest rate by 25 basis points in November last year. Australia reported annual consumer price inflation of 3.6% in Q2 this year, up from 3.3% in Q1, and 2.7% in the December quarter of 2010, and just outside the Bank's inflation target of 2-3%. The Australian economy shrank -1.2% during the March quarter due to the impact of natural disasters; placing year on year GDP growth at a slower pace of 1.2%. The RBA next meets on the 4th of October, and will release its September meeting minutes on the 20th of September.