Australia's central bank left its benchmark cash rate steady at 2.0 percent, as widely expected, and repeated that new data on economic and financial conditions would determine whether its current policy stance "will most effectively foster sustainable growth and inflation consistent with the target."
The Reserve Bank of Australia (RBA), which has cut its rate twice this year by a total of 50 basis points, also repeated that the Australian dollar had "declined noticeably" against the U.S. dollar in the past year but "further depreciation seems both likely and necessary" in light of the fall in key commodity prices.
The Australian dollar, known as the Aussie, has been depreciating since September last year and has now fallen to levels not seen since May 2009, trading around 1.34 to the U.S. dollar earlier today, down almost 9 percent this year and 16 percent since the beginning of 2014.
RBA Governor Glenn Stevens acknowledged the recent fall in Chinese stock markers and volatility in financial markets in connection with creditors' debt talks with Greece, but added that long-term borrowing rates for most sovereigns and creditworthy private borrowers remain "remarkably low."
As in recent months, Steven said Australia's economy continues to grow at a rate that is below its longer-term average and will be operating with spare capacity for some time yet, so inflation is forecast to remain consistent with the bank's target over the next one to two years, even with a lower exchange rate.
Australia's Gross Domestic Product expanded by 0.9 percent in the first quarter from the fourth quarter for annual growth of 2.3 percent, down from 2.5 percent in the fourth quarter and 2.7 percent in the third and second quarters of 2014.
Unemployment in May fell to 6.0 percent from 6.1 percent in the previous two months while inflation in the first quarter of this year eased to 1.3 percent, down from 1.7 percent in the previous quarter, well below the RBA's target of 2-3 percent.
The Reserve Bank of Australia issued the following statement by its governor, Glenn Stevens: