- Glenn Stevens, RBA Governor
The Reserve Bank of Australia decided to leave its interest rates on hold at record low to bolster growth and underscored that overly strong currency is undermining the economy's transition away from mining investment. The OCR target was left at 2.5% for a 13th straight month, widely meeting economists expectations for no change. The RBA has repeatedly said about the likelihood of a period of stable interest rates since February this year amid a tepid improvement in investment outside the resource sector, as well as significant advances in house prices and increasing pipeline of home building. The RBA's rate decision came hours after the Australian Bureau of Statistics showed the current account deficit widened a seasonally adjusted 76% to $13.742 billion. A separate report showed a rise in home building approvals, which may suggest the economy is shifting away from its reliance on mining. Approvals for new home construction jumped 2.5% in July, beating economists' expectations of a 1.9% rise.
The central bank is trying to spur domestic growth, including residential construction, to encourage hiring of former mine workers and prevent a growth gap emerging as the resource investment boom fades. That has been hampered by a lack of spending by companies and the strong Aussie Dollar, the best performing G10 currency this year.
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