The Reserve Bank has kept interest rates on hold at its April board meeting but has not ruled out further rate cuts if the economy hits turbulence.
The RBA’s decision means the cash rate has remained at 3 per cent — a historical low — since the last 25 basis points cut in December.
‘‘At today’s meeting, the Board judged that it was prudent to leave the cash rate unchanged,’’ RBA governor Glenn Stevens said in a statement.
‘‘The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand.’’
Mr Stevens added that the rates easing cycle appeared to have ‘‘an expansionary effect on the economy’’ and that ‘‘further such effects can be expected to emerge over time’’.
Macquarie Bank senior economist Brian Redican said the bias towards lowering rates further suggested the RBA was ‘‘not getting carried away with some of the most recent stronger data points.’’
‘‘They are waiting to see the whites of the eyes before shooting again,’’ said Mr Redican.
‘‘Over the last month, we’ve had some more positive data in Australia, so the Reserve Bank had the option of becoming more upbeat in terms of its statement, and it’s chosen not to do that.’’
The Australian dollar fell after the RBA’s decision. A few minutes after the announcement, the currency was at $US1.045, down from $US1.046 shortly before the bank’s decision was announced.
Citi senior economist Joshua Williamson said the April statement was, as he had expected, a “carbon copy” of last month’s statement.
He added that if the Reserve Bank chose not to cut again at its next one or two meetings, it would be unlikely to lower rates this year.
“We think the wind of opportunity is closing as more time goes by. So if we don’t see a rate cut in the next month or two, we think it’s highly unlikely we’ll see one further out. This is the bottom of the cycle.”