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RBA Maintains Record Low Rate of 2.5%; AUD/USD Stable

The RBA held the overnight cash rate (OCR) at the record low of 2.5%.There were some good signs that can be attributed to a lower AUD from last year's high, though recent gains can threaten again. There were also signs that the record low OCR has helped, but the economy is still too weak for the bank to consider a tightening policy.

Glenn Stevens stated:

"In Australia, the economy grew at a below trend pace in 2013. Recent information suggests slightly firmer consumer demand over the summer and foreshadows a solid expansion in housing construction. Some indicators of business conditions and confidence have improved from a year ago and exports are rising. But at the same time, resources sector investment spending is set to decline significantly and, at this stage, signs of improvement in investment intentions in other sectors are only tentative, as firms wait for more evidence of improved conditions before committing to expansion plans. Public spending is scheduled to be subdued.

The demand for labour has remained weak and, as a result, the rate of unemployment has continued to edge higher. It will probably rise a little further in the near term. Growth in wages has declined noticeably. If domestic costs remain contained, some moderation in the growth of prices for non-traded goods could be expected over time, which should keep inflation consistent with the target, even with lower levels of the exchange rate."

(Source: Official RBA statement)

The AUD/USD traded sideways surrounding the release, and may be forming a double top as we get started in the 4/1 US session.