RBA leaves Rates on hold at 2.5%

INTEREST rates have remained steady at 2.5% after the Reserve Bank on Tuesday decided to keep the cash rate on hold.

The decision, RBA Governor Glenn Stevens wrote, was due to slow global growth with "reasonable prospects of a pick-up next year".

While the decision has not given home owners on variable mortgages further relief, it will allow them to predict payments for the rest of the year with more certainty.

Mr Stevens wrote global conditions "remain very accommodative", with volatility in financial markets having abated.

The RBA made the hold decision based on slightly below-trend growth this year and a jobless rate that edged higher in recent months.

"This is likely to persist in the near term, as the economy adjusts to lower levels of mining investment," Mr Stevens wrote.

"Further ahead, private demand outside the mining sector is expected to increase at a faster pace, though considerable uncertainty surrounds this outlook."

Mr Stevens wrote there were some improvements in household and business sentiment recently, but public spending was forecast to be weak.

He also wrote the Australian dollar remained "uncomfortably high", and a lower exchange would be needed to achieve "balanced growth" in the economy.

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