Australian Reserve Bank to keep rate at current level

The Reserve Bank of Australia (RBA) will keep the cash rate at its current level of 2.5 percent "for some time if the economy was to evolve broadly as expected", the RBA said in the minutes of its March board meeting released on Tuesday. "Developments since the previous meeting had supported that assessment," the RBA observed in the minutes of the Monetary Policy Meeting of the RBA Board on March 4th. The Australian unemployment rate increased to 6 percent in January and remained at this level in February, but the RBA said the there was evidence that the labor demand had stabilized after earlier falls to low levels. "While the labor market was expected to remain subdued for a while and wage growth had declined, the board observed that this was consistent with conditions in the labor market lagging behind changes in economic activity," the minutes said. "There were further signs that low interest rates were providing support to activity, with improved economic conditions evident across a range of household and business indicators." The central bank said mining investment in Australia was estimated to have declined in the December quarter, as expected, and non-mining investment had remained soft, but there were signs of recovery in the non-mining sector. "In the first reading for 2014/15, the ABS capital expenditure data suggested that a small improvement was in prospect for non- mining business investment," the bank said. The RBA also noted that growth in household spending had picked up slightly in the December quarter, but it said the pace of growth was expected to remain a little below average for a while. "Members noted that construction firms were optimistic about the outlook and had reported a pick-up in inquiries from prospective new home buyers," the RBA said. The bank said Australia's exports grew at a rapid rate in the December quarter, particularly for iron ore as additional capacity came on line while the lower Australian dollar had supported an increase in international tourism.