By Claire Reilly

SYDNEY, NSW: The board of the Reserve Bank of Australia has opted to leave Australia’s cash rate unchanged at 4.75 per cent, according to a statement from RBA governor Glenn Stevens.

“Conditions in global financial markets have continued to be very unsettled,” said Stevens. “Moreover, the uncertainty and financial volatility have reduced confidence, which could result in more cautious behaviour by firms and households in major countries.

“Australia's terms of trade are very high, which has increased national income considerably. Investment in the resources sector is picking up very strongly and some related service sectors are enjoying better than average conditions. In other sectors, cautious behaviour by households and the earlier rise in the exchange rate have had a noticeable dampening effect.

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“The impetus from earlier Australian Government spending programs is now also abating, as had been intended. While there remain good reasons to expect solid growth over the medium term, the indications are that the pace of near-term growth is unlikely to be as strong as earlier expected.

“At today's meeting the Board judged the current cash rate remained appropriate. As always, the Board will continue to assess carefully the evolving outlook for growth and inflation.”