The Reserve Bank of Australia (RBA) left the official cash rate on hold at 1.5% for another month after its November board meeting.
This decision saw the Australian dollar jump from 76.80 US cents at 2.20pm (Sydney and Melbourne time) to 76.94 US cents just twenty minutes later. It had previously been at 76.94 US cents earlier in the day before dropping in the lead up to the RBA's decision.
In a statement that was largely unchanged from previous months, RBA Governor Philip Lowe spoke about relatively positive conditions for non-mining businesses and employment growth, as well as a strong Australian dollar.
This decision on rates comes days before the RBA releases its updated forecasts for Australian economic growth, inflation and unemployment in its quarterly Statement on Monetary Policy on Friday 10 November. So far the RBA is positive about current conditions.
“The Australian economy expanded by 0.8% in the June quarter. This outcome and other recent data are consistent with the Bank's expectation that growth in the Australian economy will gradually pick up over the coming year,” Lowe said in one of the few changes to the statement from October.
“The outlook for non-mining business investment has improved, with the forward-looking indicators being more positive than they have been for some time.”
This mood was reflected in recent comments from Craig James, chief economist at CommSec.
“Strong jobs growth and business conditions may have contributed to a more optimistic assessment of the economy over the year ahead,” said James.
“Interest rates are expected to remain at record lows of 1.5% through to the end of 2018, alleviating some concerns around the health of household balance sheets.”