By CountingPips.com
The Reserve Bank of Australia decided to hold its interest rate at its lowest standing since 1960 at 3.00 percent today. Today’s rate decision was widely expected and follows a rate hold in May after a reduction of 25 basis points in April. The RBA had 
slashed the interest rate by 1.00 percent in February and in December for a total of 425 basis points since September 2008 in response to the global economic downturn.
Glenn Stevens, RBA Governor of Monetary Policy, commented on the global economy in the bank statement saying, “Evidence has continued to emerge that the global economy is stabilising, after a sharp contraction during the December and March quarters. The considerable economic policy stimulus in train in most countries is helping to contain the downturn, and should support an eventual recovery. The turnaround is clearest in China and some other emerging countries. Recovery in the major countries is likely to take longer to begin and be slower when it does occur.”
Stevens said that the Australian economy has continued to contract in 2009 and that job growth will likely fall going forward. On inflation and the direction of bank policy, Stevens stated, “the prospect of inflation declining over the medium term suggests that scope remains for some further easing of monetary policy, if needed. In assessing how it might use that scope, the Board will continue to monitor how economic and financial conditions unfold, and how they impinge on prospects for a sustainable recovery in economic activity.”
In other Australian economic news today, the Australian Current Account deficit decreased by 27 percent in the first quarter of 2009 according to data released by the Australian Bureau of Statistics. Australia’s current account balance for the first quarter was a seasonally adjusted deficit of A$4,614 million changed by A$1,743 million from a revised A$6357 million million in the fourth quarter of 2008. Helping to decrease the deficit was a 22 percent surplus on goods and services while the income deficit decreased by 8 percent.
The Australian dollar was mostly higher in Forex Trading today as the aussie gained versus the US dollar, euro, Japanese yen and Canadian dollar while falling versus the New Zealand dollar.
Tomorrow stayed tuned for the release of the Australian Gross Domestic Product release for the first quarter of 2009. Forecasts are for a 0.2 percent decline which would bring the Australian economy into two straight declining quarters of GDP growth which is the general definition of a recession.
