SYDNEY- Australia’s central bank kept its cash rate at a record low of 0.1 percent on Tuesday and ended its A$275 billion ($194.40 billion) bond buying campaign as expected, but pushed back hard on market wagers for an early rate rise.
Wrapping up its February policy meeting, the Reserve Bank of Australia (RBA) emphasized that ceasing bond purchases did “not imply” a near-term increase in interest rates and the Board was still prepared to be patient.
“As the Board has stated previously, it will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range,” RBA Governor Philip Lowe said in a brief statement. “While inflation has picked up, it is too early to conclude that it is sustainably within the target band.”
The dovish message saw the local dollar slip 0.4 percent to $0.7036 in response. Lowe is set to give a speech on policy on Wednesday and the bank will release a full set of economic forecasts on Friday.
Most analysts had expected an end to bond buying as such quantitative easing was no longer required with unemployment falling to 13-year lows of 4.2 percent and core inflation surging to seven-year highs of 2.6 percent.
