- Glenn Stevens, RBA Governor
The Australian Dollar made a U-turn against its U.S. counterpart following the Reserve Bank of Australia's meeting, where policymakers decided to keep its monetary policy on hold, reiterating its earlier pledge to keep rates on hold for a longer period of time.
RBA's Governor Glenn Stevens and his team kept the key refinancing rate at 2.5%, meeting analysts' expectations. During the previous meeting Australian policymakers called for a period of stable interest rates that is need to foster domestic demand, which is stuck in a bumpy transition out of a decade-long mining boom. At the same time, the RBA expressed its concerns about the strength of the Aussie, saying a weaker exchange rate will be welcomed.
After making a 2.25% adjustment to the benchmark interest rate from late 2011 through August, the central bank's scope to add fresh stimulus is very limited, as house prices in Sydney are risking creating a housing bubble. Therefore, markets and economists are making their bets the RBA will not make any further interventions this year in order to avoid a growth gap. At the same time, the unemployment rate remains at 6%- the highest since July 2009, while business investment turned lower in the fourth quarter by the most since 2009.
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