RBA leaves cash rate at 2% as lower AUD supports growth

For the second time in as many months the Reserve Bank of Australia signaled in its cash-rate statement that the Australian dollar was at a level which was assisting economic growth rather than hampering it.

The Reserve Bank of Australia left interest rates on hold at record-low levels on Tuesday as board members continued to assess the positive impact past rate cuts and the weaker exchange rate have on growth.

Before August the RBA had signaled that the Australian dollar was overvalued and inconsistent with Australia's terms of trade, which is currently at its lowest in around eight years.

The Australian dollar has been trading around $0.71-$0.73 against the US dollar over the last month; it's weakest in around six years, and slightly lower than in July.

Previous monetary easing is also expected to assist with Australia's growth transition; with the RBA having cut the cash rate twice already this year, in February and May.

The only material difference between this month's cash-rate statement and August's was the acknowledgement that China is creating instability in global markets.

"Equity markets have been considerably more volatile of late, associated with developments in China, though other financial markets have been relatively stable," today's statement read.

Stevens also said that equity prices have been falling and had been more volatile recently, "in parallel with developments in global markets."