Australia's central bank left its benchmark cash rate steady at 2.0 percent, as expected, and repeated its guidance from last month that its policy stance would be determined by "further information on economic conditions and financial conditions to be received over the period ahead."
But the Reserve Bank of Australia (RBA), which has cut its rate twice this year by a total of 50 basis points, added that the Australian dollar, known as the aussie, "is adjusting to the significant declines in key commodity prices," omitting its frequent statement that "further depreciation seems both likely and necessary," signaling that it is more comfortable with the current exchange rate.
The aussie has been depreciating since September 2014 and fallen to levels not seen since April 2009. In response to the RBA's statement, the aussie firmed to 1.36 to the U.S. dollar from 1.37, for a drop of 10.3 percent since the start of the year and a fall of 17.6 percent since the start of 2014.
In his statement, RBA Governor Glenn Stevens repeated that Australia's economy was continuing to growth at a pace that its "somewhat below long-term averages," but added today that this was associated with "somewhat stronger growth of employment" compared with July's statement that unemployment had been "little changed."
In June Australia's unemployment rate rose to 6.0 percent from 5.9 percent in May but was still down from the recent peak of 6.3 percent in October 2014.
However, as in recent statements, Stevens added that country's economy would be operating with spare capacity for some time and inflation was forecast to remain consistent with the RBA's target over the next one to two years, even with a lower exchange rate.
Australia's headline inflation rate rose slightly to 1.5 percent in the second quarter form 1.3 percent in the first 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: