Cash rate left by RBA at 3%

Reserve Bank of Australia

Despite further signs of deterioration in the economy, the Reserve Bank of Australia (RBA) has left the cash rate unchanged that could witness the unemployment rate hit six per cent this week.

The cash rate has been widely tipped by economists and financial markets, being left at a 49-year low of 3.0 per cent following Tuesday's monthly RBA board meeting in Sydney.

In the month of April the central bank reduced rate by 25 basis points, bringing total reductions since September to 425 basis points.

Yet, this year financial market experts expect at least another 50 basis points worth of reductions.

RBA governor Glenn Stevens said in a statement, “Monetary policy has been eased significantly.”

Mr Stevens further added, “In assessing whether further reductions in the cash rate are required over the period ahead, the board will monitor how economic and financial conditions unfold and how they impinge on prospects for a sustainable recovery in economic activity.”

On Friday the RBA will come out with its quarterly monetary policy statement, which might show descending revisions to its growth forecasts.