The Reserve Bank of Australia (RBA), which has cut its rate by 50 basis points this year to counter slower growth from reduced demand for its raw materials, repeated its view from August that the country's economy is continuing to expand moderately and its policy stance needs to be accommodative to support borrowing and spending.
The RBA also repeated that the country's economy was likely to be operating with spare capacity for some time with inflationary pressures contained so inflation would remain consistent with the bank's target over the next one to two years, even with a lower exchange rate.
Australia's inflation rate rose to 1.5 percent in the second quarter from 1.3 percent in the first quarter, below the RBA's target of 2-3 percent. Gross Domestic Product in the second quarter expanded by only 0.2 percent from the first quarter for annual growth of 2.0 percent.
The Australian dollar has been depreciating since September 2014 but over the last month it has firmed slightly. It was trading at 1.40 to the U.S. dollar today, down almost 13 percent this year.
The Reserve Bank of Australia issued the following statement by its governor, Glenn Stevens:
"At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent.