The Reserve Bank has kept the cash rate unchanged, saying the economy is improving but it will be some time before unemployment drops consistently.
The cash rate remains at 2.5 per cent, where it has been since a quarter of a percentage point cut in August.
There have been emerging signs of improvement in investment intentions in sectors of the economy other than mining, but those plans remain tentative as companies wait for more evidence of improved economic conditions, RBA governor Glenn Stevens said in a statement after the July board meeting.
“Overall, the bank still expects growth to be a little below trend over the year ahead,” he said.
“There has been some improvement in indicators for the labour market in recent months, but it will probably be some time yet before unemployment declines consistently.”
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The RBA stuck by its stance that it has held since the beginning of 2014 that there will “a period of stability in interest rates.”
Mr Stevens also indicated he was still concerned about the level of the Australian dollar.
“The exchange rate remains high by historical standards, particularly given the declines in key commodity prices, and hence is offering less assistance than it might in achieving balanced growth in the economy,” he said.
The dollar hit a near three-month high after the announcement.
Just after 2.30pm (AEST) on Tuesday, the dollar was worth 94.51 US cents, up from 94.17 US cents shortly before the RBA’s decision was announced.
