Aussie Falls as RBA Holds Rates, Sees Scope for Easier Policy

Australia’s dollar dropped against most of its 16 major counterparts after the central bank kept interest rates at a record low and policy makers said low inflation may provide scope for easier policy.

The Reserve Bank of Australia kept the cash rate at 2 percent as forecast by all except one of the 29 economists surveyed by Bloomberg. Policy makers have cut borrowing costs by 2.75 percentage points since late 2011 to bolster industries outside mining following the end of an investment boom.

“They implied there is a possibility they are going to cut further,” said Toshifumi Sugimoto, the chief investment officer at Capital Asset Management in Tokyo. “That lowers the pressure on the strong Australian dollar.”

Australia’s currency weakened 0.3 percent to 70.90 U.S. cents as of 3:09 p.m. in Sydney. It dropped to an almost seven-year low of 68.27 cents in January.

“Continued low inflation may provide scope for easier policy, should that be appropriate to lend support to demand,” policy makers said in a statement.

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