RBA keeps cash rate on hold

Tuesday, 3 Jul 2012

The Reserve Bank of Australia (RBA) has opted to keep the cash rate on hold at 3.5 per cent for the next month, which is in line with many experts' expectations.

Glenn Stevens, governor of the RBA, said that growth in the world economy had gathered pace in the first few months of 2012 after a slowdown at the end of last year.

Financial markets have responded positively to signs of progress towards long-term stability in Europe, while capital markets are open to corporations and banks with favourable ratings.

"In Australia, recent data suggest that the economy continued to grow in the first part of 2012, at a pace somewhat stronger than had been earlier indicated," Mr Stevens explained.

He added that labour conditions have firmed up slightly, even in light of job losses in some sectors.

Responding to the decision, the Housing Industry Association said that the decision had failed to address some of the deteriorating conditions in the home building sector.

Housing starts have fallen for the past two years and have declined every state and territory over the last 12 months.