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RBA leaves interest rate unchanged at 4.5%

The official cash rate has not been increased for June.

Author: Sam Gooch
Date: Jun 21, 2010 - 9:58:46 AM

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The official cash rate has not been increased for June.

The Reserve Bank of Australia (RBA) has announced it is leaving the interest rate unchanged at 4.5 per cent for June.

Glenn Stevens, governor of the organisation, made the declaration as the RBA met to decide whether or not to increase the official cash rate.

He noted that investors had displayed a "good deal more caution" since they met the last time at the beginning of May - when the group increased the rate from 4.25 per cent to 4.5 per cent.

But this was because of the worries over sovereign creditworthiness in several European countries, he continued.

However, due to the caution the long-term government bond rates declined and equity prices were reduced and the Australian dollar also went down as part of the changes.

The RBA noted it would be monitoring the world economy, predicting that global growth will be "about trend pace in 2010".

Mr Stevens added: "Conditions in Europe overall have been relatively weak and the foreshadowed budgetary tightening will probably mean that this will continue, but growth is becoming more established in North America."

He concluded that the interest rates for borrowers were now consistent with around the past decade - a "significant adjustment" from the levels met a year ago.

"Taking all the available information into account, the Board views this setting of monetary policy as appropriate for the near term," Mr Stevens remarked.

These comments come after a survey by the Australian Associated Press stated that 17 economists predicted the RBA would maintain its current cash rate.

But they all believe the rate will hit the 5.25 per cent mark by the end of the year.

After the May increase, ANZ – which offers a range of credit cards - upped the interest rate on a selection of its term deposits and lending products by 0.25 per cent, the same increase as the RBA.

View all articles by Sam Gooch

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