The Reserve Bank of Australia (RBA) left the cash rate steady at 1.5% at the conclusion of its April monetary policy meeting, an outcome that was widely expected by economists and financial markets alike.
The Reserve Bank of Australia's decision to keep its cash rate at a record low of 1.5 per cent today came as little surprise.
"The RBA can't cut rates for fear of further fuelling an overblown housing market, and the RBA can't [raise] rates due to fear of depressing an already tepid domestic economy", said Matthew Peter, the chief economist at asset manager QIC.
"Growth in household borrowing, largely to purchase housing, continues to outpace growth in household income", the RBA said - a line that did not appear in last month's verdict. On Monday, retail sales data disappointed.
In the past week, both the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission have announced tighter rules and increased supervision of banks' lending to investors in an effort to contain the growth in lending to investors to 10 per cent.
"There was a tragedy in Russian Federation and there may be some hedging-type buying ahead of the French presidential debate and also French elections in three weeks", said Yujiro Goto, currency analyst with Nomura in London, on the yen's surge.
"The RBA noted that "some indicators in the labour market have softened recently", said Elias Haddad, a director at Commonwealth Bank of Australia. CoreLogic figures released yesterday show capital city house prices grew in March at their fastest annual pace since May 2010. Australia's banking regulator further tightened lending curbs on Friday amid concern runaway home-price growth is stoking a housing bubble.
The market is a good barometer for future events and, judging by the performance of the financial sector, there isn't anything on the horizon to worry investors too much.
On the positive ledger, material stocks ended 0.6 per cent higher, with gold shares gaining the most as prices for the yellow metal hit one-week highs amid a bid for safety in the wake of rising geopolitical tensions.
"We will want to see an improvement here before we can be confident that growth in the overall economy is strengthening", Lowe said in his speech.
"Additionally, market-driven factors including high apartment supply, record low rental yields and affordability constraints should gradually contribute to slower housing market conditions", Mr Lawless said. It was last down 0.3 per cent to US$0.7582 to stay near a three-week low.
"Most measures of business confidence are at, or above, average and non-mining business investment has risen over the past year".