RBA leaves cash rate on hold at 2.5 per cent

THE Reserve Bank has left interest rates unchanged at 2.5 per cent.

The RBA has left interest rates on hold at a record low of 2.5 per cent.

THE Reserve Bank has left interest rates unchanged at 2.5 per cent.

The decision was widely expected by economists.

Rates have been on hold at a record low of 2.5 per cent since August last year.

"On present indications, the most prudent course is likely to be a period of stability in interest rates," RBA governor Glenn Stevens said in a statement accompanying the decision.

"In the Board's judgment, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target."

In the latter half of 2013 Mr Stevens on several occasions said the Australian dollar was uncomfortably high.

However, in recent weeks the Australian dollar has stayed below 90 US cents, which seemed to please the RBA governor.

"The exchange rate has declined further, which, if sustained, will assist in achieving balanced growth in the economy," Mr Stevens said.

The RBA governor also said there is a good change that growth in the global economy should pick up this year.

"The United States economy continues its expansion and the euro area has begun a recovery from recession, albeit a fragile one," Mr Stevens said.

"Japan has recorded a significant pick-up in growth, while China's growth remains in line with policymakers' objectives. Commodity prices have declined from their peaks but in historical terms remain high."

The Australian dollar rose above 88 US cents after the RBA's decision. At 2.34pm AEDT, the currency was worth 88.24 US cents, up from 87.61 US cents shortly before the RBA's announcement following its February board meeting.

In a statement accompanying its decision, the RBA said "the most prudent course is likely to be a period of stability in interest rates".

The currency ended Monday's local session at 87.48 US cents.