Reserve Bank of Australia retains key rate near zero

RTTNews reports that Australia's central bank maintained its key interest rate near zero and pledged to avoid a rate hike for at least three years in order to support employment growth and to bring inflation back to the target range.

The policy board of the Reserve Bank of Australia decided to leave its cash rate unchanged at a record low of 0.10 percent.

The central bank retained the target yield on the 3-year Australian Government bond at around 0.1 percent, asset purchases of A$100 billion and also the parameters of the Term Funding Facility.

The RBA today said it will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range, the bank said. For this to occur, wages growth will have to be materially higher than it is currently.

This will require significant gains in employment and a return to a tight labor market. Given the outlook, the board is not expecting to increase the cash rate for at least three years.

The board will keep the size of the bond purchase program under review, particularly in light of the evolving outlook for jobs and inflation. The board said it is prepared to do more if necessary.