The Reserve Bank of Australia (RBA) has announced it will leave the current cash rate at 1.5 per cent.
In a statement to media, RBA Governor, Philip Lowe said the economy is still on track to grow over the coming twelve months but cautioned the rising dollar could slow the pace of growth.
On Tuesday the Aussie dollar cracked the 80 cent mark in the US, and Lowe suggested the higher exchange rate could put pressure on the economy.
“The higher exchange rate is expected to contribute to subdued price pressures in the economy. It is also weighing on the outlook for output and employment.
“An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast,” Lowe said in a statement.
The RBA board’s decision to keep rates on hold should have come as no surprise to most Australians, given Lowe’s comments in July that a cut to rates would risk increasing household debts.