RBA leaves rates on-hold, a rising AUD would slow the economy

The Reserve Bank of Australia (RBA) at its October monetary policy meeting, kept the policy steady, leaving the official cash rate (OCR) unchanged at a record low of 1.50%, as widely expected.

The RBA statement read: “The low level of interest rates is continuing to support the Australian economy. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.”

With regards to the current level of rates and the value of the Aussie, the RBA added: “The Australian dollar has appreciated since mid-year, partly reflecting a lower US dollar. The higher exchange rate is expected to contribute to continued subdued price pressures in the economy. It is also weighing on the outlook for output and employment. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.”