- Glenn Stevens, RBA Governor
No surprises provided by Australia's central bank this morning, as the Reserve Bank of Australia decided to stay pat on interest rates, keeping its benchmark cash rate at record low, and reiterated it expects a period of steady borrowing costs amid underperforming economy, as the central bank tries to rebalance the economy as Australia's mining investment boom fades. The cash rate has now been at historic low of 2.5% for twelve months. The Australian Dollar was little changed following the widely anticipated uneventful outcome, trading at 93.33 U.S. cents. The Aussie lost 1.5% in July, halting a five-month 7.7% rally, and is expected to fall another 87 cents by the second quarter next year. Nevertheless, central banks still believes that the nation's Dollar is at uncomfortably high level, which is impeding a transition in economic growth.
Meanwhile, Australia's trade gap unexpectedly narrowed in June as imports declined while exports remained unchanged. The trade deficit shrank to A$1.68 billion in June from a revised $2.04 billion deficit a month earlier, the Australian Bureau of Statistics, coming in smaller than economists expectations of a $2.0 billion shortfall. Australian exports grew by just $125 million in June to $26.6 billion, while imports declined 1% to $28.3 billion.
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