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Rates on hold for foreseeable future

Shane Wright Economics Editor    The West Australian      April 2  2013

The Reserve Bank has left official interest rates on hold and signalled it may sit on the interest rate sidelines for some time to come.

Following its monthly meeting today, governor Glenn Stevens said the cash rate would remain at 3 per cent.

In a statement, he said there were signs that current low rates were starting to work while there was also some encouraging signs overseas.

"There are a number of indications that the substantial easing of monetary policy during late 2011 and 2012 is having an expansionary effect on the economy," he said.

"Further such effects can be expected to emerge over time."

One of the bank's key concerns has been whether non-mining parts of the economy will take up the slack left by a slowdown in the resources sector.

Mr Stevens said the peak in resources investment was "drawing close" which meant there was scope for other parts of the economy to quicken.

"While the near-term outlook for investment outside the resources sector is relatively subdued, a modest increase is likely to begin over the next year," he said.

"Dwelling investment is slowly increasing, with rising dwelling prices and high rental yields. Exports of natural resources are strengthening. Public spending, in contrast, is forecast to be constrained."

The widely expected decision follows confirmation that the nation's housing market is on the mend.

RP Data-Rismark reported house values in Perth jumped by 4.5 per cent in March.

Overall dwelling values lifted by 3.4 per cent last month to be 4.3 per cent higher over the quarter.

RP's report follows new figures from the Real Estate Institute of WA, which showed the median house price in Perth hit $510,000 in the March quarter
It tops the previous record of $505,000 set in 2010.

Last modified onTuesday, 28 May 2013 04:40

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