Neil DennisThe Reserve Bank of Australia held its main cash rate steady at a record low of 1.5% at its September policy meeting on Tuesday.
While the bank noted that growth in the Australian economy would gradually pick up over the coming year, it omitted previous references to its central forecast for economic growth of around 3%.
Inflation outlook
The central bank reported strength in residential construction activity and growth in retail sales, but said little about the outlook for inflation.
Consumer price inflation dipped below the RBA's target range of 2-3% to 1.9% in June as the relative strength of the Australian dollar has kept a lid on price rises.
Low wage growth also remained a concern, but the RBA said stronger conditions in the labour market would drive wages higher over time, while inflation would also pick up as the economy strengthened.
Economic growth
The reserve bank omitted any mention of its central forecast for 3% economic growth, but this came as little surprise given data on second-quarter gross domestic product is published on Wednesday.
"The RBA probably did not want to front-run the release," said Rob Carnell at ING.
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"We recently revised our forecast for second quarter growth to a quarterly 0.9%, which is not far off a 4% annualised rate, so the omission was probably to avoid an unintended steer in a lower direction."
Market reaction
Carnell continued: "Markets still do not see much scope for any change in the policy stance until next year at the earliest."
Nevertheless, the Australian dollar got a further kick higher, rising 0.4% against the US dollar to A$0.7973, largely the effect of rising commodity prices.
The strong domestic currency has been something of a concern to the central bank, and few believe the RBA will be keen to raise rates while the dollar continues to appreciate.
Australian stocks were fractionally higher, with the S&P/ASX 200 up 0.1% to 5,706.20.
