Australia leaves rates on hold
SYDNEY, Australia (CNN) -- Australia's central bank has left interest rates steady at 5.5 percent after last month's rise, in a climate of higher oil prices and slowing economic growth.
The decision not to lift rates surprised most market observers, who were expecting a rise of another quarter of a percentage point.
Australian Prime Minister John Howard, speaking on Tuesday just before the Reserve Bank of Australia's monthly board meeting, said he was concerned about the impact higher petrol pump prices were having on consumer demand.
Deputy Prime Minister John Anderson also said Australia did not need another rate rise.
A statement on the RBA's Web site on Wednesday morning said: "At its meeting on 5 April, the Reserve Bank Board decided to leave the cash rate target unchanged at 5.50 per cent."
Last month, the central bank raised interest rates for the first time since December 2003, on concern over inflationary pressures ahead.
HSBC Australia chief economist John Edwards said in a commentary Wednesday that the RBA's decision "effectively delays another rate rise for some considerable time" because the bank was unlikely to lift rates in May, just before Federal Treasurer Peter Costello delivers the national budget.
Edwards said RBA Governor Ian Macfarlane must have taken into consideration the probability that leaving the cash rate unchanged in April "really means leaving it unchanged until July."
The Australian dollar dropped to trade at 76.52 U.S. cents on Wednesday, while the stockmarket rose, with the benchmark S&P/ASX200 up about half a percent to 4153.6 by late morning.
Australia's labor market is tight, with the jobless rate at a 28-year low, while economic growth has slowed to an annual rate of just 1.5 percent in the December 2004 quarter.
Australia's benchmark rate of 5.5 percent is still high among industrialized nations, exceeded only by New Zealand's 6.5 percent.
