Investing.com - The Reserve Bank of Australia lowered its benchmark interest rate to an all-time low on Tuesday, citing soft economic growth, tame inflation and a historically high level for the Australian dollar.
In a statement, the RBA said it was cutting its benchmark interest rate to 2.5% from 2.75%, mostly in line with market expectations.
The RBA last cut the key rate in May, by a quarter-percentage point.
In its accompanying rate statement, RBA Governor Glenn Stevens said the Aussie dollar “has depreciated by around 15% since early April, although it remains at a high level.”
He added that further depreciation “would help to foster a rebalancing of growth in the economy.”
Stevens left the door open for further easing, saying “the inflation outlook could provide some scope to ease policy further, should that be required to support demand.”
“The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time.”
Following the decision, the Australian dollar was higher against its U.S. counterpart, with AUD/USD rising 0.6% to trade at 0.8983.
Meanwhile, Asian stock markets were mixed, with Australia’s ASX/200 Index dipping 0.1%, Japan’s Nikkei 225 Index jumping 1%, while Hong Kong's Hang Seng Index dropped 1%.
In a statement, the RBA said it was cutting its benchmark interest rate to 2.5% from 2.75%, mostly in line with market expectations.
The RBA last cut the key rate in May, by a quarter-percentage point.
In its accompanying rate statement, RBA Governor Glenn Stevens said the Aussie dollar “has depreciated by around 15% since early April, although it remains at a high level.”
He added that further depreciation “would help to foster a rebalancing of growth in the economy.”
Stevens left the door open for further easing, saying “the inflation outlook could provide some scope to ease policy further, should that be required to support demand.”
“The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time.”
Following the decision, the Australian dollar was higher against its U.S. counterpart, with AUD/USD rising 0.6% to trade at 0.8983.
Meanwhile, Asian stock markets were mixed, with Australia’s ASX/200 Index dipping 0.1%, Japan’s Nikkei 225 Index jumping 1%, while Hong Kong's Hang Seng Index dropped 1%.