RBA maintains cash rate again

The RBA has voted to keep the cash rate unchanged yet again in July, and has forecast that Australia's overall economic growth won't return to target until next year.

The RBA board voted to leave the cash rate unchanged at 4.75%, monetary policy governor Glenn Stevens announced.

He said the gradual recovery from the summer's economic disasters was continuing, although it is taking longer than expected to resume coal output.

Despite the lifted output, growth through the rest of 2011 is unlikely to be as strong as first expected, he said.

But Stevens added that “over the medium term, overall growth is still likely to be at trend or higher, if the world economy grows as expected.”

While global economic growth slowed in June, most forecasters paint an overall picture of expansion, he said.

Stevens added that although year-ended CPI inflation is likely to remain elevated due to the impact of the disasters, in underlying terms inflation has been at the bottom range of forecasts.

But the RBA's projections of a gradual increase in underlying inflation may lend credence to some financial analysts' predictions of a rate rise by as early as August.