SYDNEY--Australia's central bank left interest rates unchanged
at a record low 2.5% Tuesday, once again citing the high Australian
dollar as a headwind for growth and pointing to a continuing period
of steady rates.
There was no significant shift in the language of the central
bank from prior months, although it did acknowledge that the
Australian dollar had fallen.
"On present indications, the most prudent course is likely to be
a period of stability in interest rates," Reserve Bank of Australia
Gov. Glen Stevens said in an accompanying statement.
The Australian dollar fell 7% in September, fueling optimism
among exporters, but the central bank said the currency had further
to fall before it could begin to spur the economy.
"The exchange rate has traded at lower levels recently, in large
part reflecting the strengthening U.S. dollar," Mr. Stevens
said.
"But the Australian dollar remains above most estimates of its
fundamental value, particularly given the further declines in key
commodity prices in recent months."
He added: "It is offering less assistance than would normally be
expected in achieving balanced growth in the economy."
The central bank has held interest rates at a record low for
well over a year as it seeks to cushion the economy from the end of
a mining-investment boom and support recovery in other parts of the
economy.
So far, the policy has fueled a recovery in housing
construction, but also produced a strong surge in house prices that
has worried the central bank--forcing it to mull new lending
restrictions on investor loans.
Mr. Stevens noted that credit growth was moderate overall, but
added that there had been a further rise in mortgage lending to
investors over recent months, while house prices had continued to
rise.
Forward-looking indicators of the job market had shown
improvement, but Mr. Stevens said it would be some time before
unemployment fell from a current decade high of 6.2%.
Write to James Glynn at james.glynn@wsj.com
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