Interest rates kept on hold

HOME owners can relax for another month after the Reserve Bank of Australia decided to keep interest rates on hold at 4.75 per cent in their first meeting in the new financial year.This is the eighth straight month that the board has left the cash rate unchanged since they raised it by 25 basis points last November.

In a statement released Tuesday afternoon, Reserve Bank governor Glenn Stevens said Australia’s terms of trade were now at very high levels and national income was growing strongly.

Mr Stevens said there had been a gradual recovery from the natural disasters over the summer but the resumption of coal production in flooded mines continued to proceed slower than initially expected.

“The recovery will boost output over the months ahead, and there will also be a mild boost to demand from the broader rebuilding efforts as they get under way,” Mr Stevens said.

“But growth through 2011 is now unlikely to be as strong as earlier forecast. Over the medium term, overall growth is still likely to be at trend or higher, if the world economy grows as expected.”