- Glenn Stevens, RBA Governor
The Reserve Bank of Australia held interest rates at 2.25% for the second consecutive month, referring to a slight improvement in activity and Sydney house price inflation in its decision. The move came as a surprise to financial markets, which had priced in a 70% possibility of an interest rate cut. However, the RBA said further interest rate cuts are still on the cards over the period ahead in order to ensure sustainable growth in demand and inflation consistent with the official goal. The central bank's last reduction, in February, was the first in 18 months. It was designed to foster non-mining growth in the face of tepid consumer spending and business investment.
Meanwhile, data released before the RBA rate statement showed Australian retail sales growth, which makes up more than 50% of Australia's GDP, was the highest in six months. Retail sales were up 0.7% month-on-month to a seasonally-adjusted $24.06 billion in February, the Australian Bureau of Statistics reported. The actual reading overshot market expectations for a 0.4% increase in sales, and added to upwardly revised January's reading of 0.5% growth. In contract, Australia's job ads declined for the first time in ten months in March. ANZ job advertisements slid 1.4% last month from February.
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