SYDNEY • Australia's central bank yesterday left interest rates unchanged and failed to provide policy guidance, sending the currency higher as traders bet that last month's cut could be the last.
The Reserve Bank of Australia left the benchmark rate at a record-low 1.75 per cent. A majority of the 26 economists surveyed by Bloomberg expect the bank to resume cutting in August after it eased policy by a quarter-point in May in response to record-low core inflation.
"It was a little bit surprising there wasn't an explicit easing bias," said Ms Sally Auld, head of fixed income and currency strategy for Australia at JPMorgan Chase. "I think they'll pay the price for that in the wake of recent developments in the United States," she said, referring to a weak American jobs report and the subsequent rebound in the Australian dollar.
Data last week showed that Australia's gross domestic product expanded by an annual 3.1 per cent in the first quarter, the fastest pace in 3½ years, and lending to firms rose in April by the most since 2009, indicating a possible pick-up in investment.
The Australian dollar rose and the nation's bonds remained weaker after yesterday's decision. The currency gained 0.4 per cent to 73.93 US cents in Sydney and was trading 1.01 per Singdollar. The benchmark 10-year bond yield climbed two basis points to 2.17 per cent.
Meanwhile, Australia's securities regulator yesterday said it had laid charges against the National Australia Bank for allegedly manipulating benchmark interest rates used to price financial products, an allegation the bank says it disputes. The court action is the third launched by the Australian Securities and Investments Commission against a major Australian bank this year over claims that they fixed the bank bill swap reference rate to their financial advantage.