In the wake of slowing global economy, central banks around the world are trying to do everything possible in order to mitigate the adverse effect from the slowdown. One of the main tools to settle economic indicators is manipulations with the benchmark rate. Adjustment of interest rates is an important task of any monetary authority. The Reserve Bank of Australia is no exception. Australia’s monetary policymakers adopted the same strategies as their counterparts in the developed countries leaving the benchmark rate on hold at a record low 2 percent.
“Recent information suggests that the global economy is continuing to grow, though at a slightly lower pace than earlier expected. While several advanced economies have recorded improved growth over the past year, conditions have become more difficult for a number of emerging market economies. China's growth rate has continued to moderate,” RBA Governor Glenn Stevens said explaining the Board’s decision.
The Australian economy has been undergoing a transition since the end of the mining boom. The transition has already produced positive effects. Australia’s GDP is growing steadily even amid large investment cuts in mining industry. Following the RBA’s decision, the aussie climbed and so did the national trade deficit. The shortfall widened to a seasonally adjusted A$3.41 billion (US$2.59 billion). Analysts had anticipated a smaller deficit of A$2.5 billion.
