Australia's central bank left its benchmark cash rate unchanged at 2.0 percent, as widely expected, and restated that "the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand."
But the Reserve Bank of Australia (RBA), which has cut its rate by 50 basis points this year to support growth in light of reduced external demand for its raw materials, also repeated that it had decided to maintain its current rate because "the prospects for an improvement in economic conditions had firmed a little over recent months."
Australia's economy is continuing its "moderate expansion," the RBA said, pointing to a gradual improvement in non-mining sectors along with stronger growth in employment.
The current low level of inflation reflects the spare capacity in the economy and inflation is seen in line with the RBA's 2-3 percent target over the next one to two years, the central bank said.
The rise in house prices in Melbourne and Sydney "has moderated" in recent months, the RBA said, a slight change to last month's statement when it observed that prices had continued to rise though the pace of growth had moderated.
The RBA also repeated its recent statement that the Australian dollar, known as the Aussie, was "adjusting to the significant declines in key commodity prices.
Australia's inflation rate was steady at 1.5 percent in the third and second quarters while growth in the second quarter was only 0.2 percent up from the first quarter for annual growth of 2.0 percent, down from 2.5 percent.
The Reserve Bank of Australia issued the following statement:
"At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent.