"The easing in monetary policy since late 2011 has supported interest-sensitive spending and asset values, and further effects can be expected over time"
-RBA Governor Glenn Stevens
As it was widely expected the Reserve Bank of Australia left its key refinancing rate unchanged amid signs of a pickup in housing market and as a significant depreciation in the Aussie eases pressure on the economy just before the general elections. Australian central bank kept its benchmark cash rate at its all-time low of 2.50%, after claiming it could trim the rate if necessary a month ago. The RBA has cut its cash rate seven times since late 2011, while the most recent adjustment was made on August 6, when it cut it by 25 basis points. It seems that recent cuts are working through the economy, as home prices ticked up 5.3% during the year to August 31, while Sydney property prices registered the biggest quarterly gain since April 2009. Meanwhile, Australian parliamentary elections are scheduled for September 7, where Tony Abbott from the center-right Liberal Party is expected to win the election.
Also Tuesday, the Bureau of Statistics said Australian retail sales inched higher in July, however, less than expected, as consumers decreased their spending at department stores, reflecting concerns over the economic outlook. Sales advanced 0.1% to A$21.8 billion on a monthly basis, after staying flat in June. The result compares with the median forecast made by analysts for a 0.4% gain. The main contributors to growth came from household goods and clothing, where consumers spent more 1.8% and 1.4% respectively.
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