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"Following the reduction in the cash rate in May, the Board judged that leaving the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and inflation returning to target over time".
-RBA minutes
According to the minutes released by RBA from its June meeting, the cash rate was maintained at record low 1.75 %, while measure of both short-term and long-term inflation remain below average. Following minutes, gave no indication that it would ease again in the nearest future. Meanwhile, low inflation and concerns about deflation forced RBA to announce an interest rate cut in May, in line with the release of the federal budget. Consumer prices, in turn, were below trend and are expected not to change, giving an additional support to the bank to keep the rate unchanged at 1.75% after May's 25-basis point cut.
In the meantime, during the first quarter, the Australian economy had expanded 3.1%, showing the fastest growth in three and a half years. Low interest rates as well as weak Australian dollar were reinforcing the economy, thus pushing the unemployment rate down to 5.75% from 6.25% during the current year to the March quarter. Moreover, an overall advance in exports due to the higher resource production, also provided an additional support to the economy. Recent economic data proves that Australia is experiencing overall growth, despite a huge decline in business investment.