"The effect of low interest rates was evident across a range of indicators and had further to run. Members agreed that the bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them."
-Reserve Bank of Australia
The Australian currency soared to the highest level since June versus its American counterpart, hitting 0.9537 after RBA minutes showed the easing cycle is not over yet, suggesting another rate cut is possible even though a move is not likely to be imminent. During its October policy meeting the Reserve Bank of Australia decided to keep the key-lending rate at 2.5%, and suggested the bank would closely monitor fundamental data for signs that another adjustment is needed, and saying the current level of stimulus has not yet produced its full effects. The central bank under Glenn Stevens' leadership cut the benchmark rate by 2.25% since late 2011 in an attempt to rebalance the economy as investment in key mining sector begin to crest. Board members are claiming the economy is developing at a below-trend pace up to the middle of the year. Economic output expanded 2.6% in the second quarter, slightly accelerating from the first quarter's growth of 2.5%; however, weak investment in mining sector is significantly lower than levels seen over the last decade. The resource-reach economy is highly dependent on the global demand, especially on commodities. A slowdown in the Australian economy is consistent with the slow pick-up in the world economy. The latest IMF growth projection showed they expect global growth this year to 2.9%, downwardly revised from the previous estimate of 3.1%, suggesting the RBA will be forced to cut the interest further to keep the economy at least of the same pace of expansion.
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