The RBA keeps policy rate at 3%

Because of stabilizing global economy and good domestic economic conditions, the Reserve Bank of Australia has not changed its benchmark interest rate on Tuesday, leaving it at 3%. It was in April when the central bank has last cut the cash rate target by a quarter-point.

The Australian dollar has gained some ground following the adoption of the decision, rising from $0.7963 to $0.7985.

Governor of the Central bank Glenn Stevens stated that the outlook for inflation left "some scope of further easing of monetary policy, if needed." He further added that "in assessing how it might use that scope, the board will continue to monitor how economic and financial conditions unfold, and how they impinge on prospects of a sustainable recovery in economic activity."

Domestic production has been said to be slow by Stevens while the return of capacity utilization to average levels has been predicted by him with some further decline expected in the remainder of the year. Stevens further added that weak demand for labor was the reason for wages to decrease.

Furthermore, Stevens stated that the U.S. economy was at the threshold of a turning point while conditions in Europe remained to be weak. "Growth in China has strengthened considerably, which is having an impact on other economies in the region, including Australia," he said.