Australian central bank keeps easing bias in place

Australian central bank keeps easing bias in place, cites drop in mining spending

By Jonathan Underhill

Dec. 1 (BusinessDesk) - The Reserve Bank of Australia kept the cash rate unchanged for a seventh straight month while retaining its easing bias, noting the economy was growing at a moderate pace, keeping inflation under control, in the face of a "large decline in capital spending" in the mining sector.

Governor Glenn Stevens reiterated that the outlook for inflation "may afford scope for further easing of policy, should that be appropriate to lend support to demand".

"Inflation is low and should remain so, with the economy likely to have a degree of spare capacity for some time yet," he said, repeating the wording of his statement a month ago. "Inflation is forecast to be consistent with the target over the next one to two years."

The Australian dollar was little changed at 72.62 US cents and the New Zealand dollar traded at 91.04 Australian cents, down from 91.33 immediately before the statement.

Stevens was more specific about the mining sector, citing the drop in spending while noting that business surveys suggested "a gradual improvement in non-mining sectors" over the past year, with stronger growth in employment.

He tweaked his wording on the housing market. Having said in his Nov. 3 statement that dwelling prices continued to rise in Melbourne and Sydney, today's statement said the pace of growth in dwelling prices had "moderated" in those cities.

His global assessment was little changed from last month, with growth expanding at a moderate pace, although with some further softening in Asia, continuing growth in the US and a recovery in Europe. Key commodity prices were "much lower than a year ago" reflecting increased supply including from Australia, Stevens said, adding that weaker demand was also a factor. Last month he didn't refer to demand.

(BusinessDesk)

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