Reserve Bank of Australia has decided to leave the cash rate same at 2.0%, as broadly expected and markets were not surprised at this decision.
Australia's domestic economy growth is seen as moderate but there is a slow improvement in the business surveys in non-mining sector, which has been boosting employment growth, promising a stabilization in unemployment rate.
There was a modest boost in the labor market confidence with November's "somewhat stronger growth in employment" and this statement referring to "stronger employment growth".
The bank confirmed the mid-point of its underlying inflation forecast for 2016 as 2.5%, in the December statement, it however confirm the November inflation assessment that inflation will be consistent with the target for coming 1 or 2 years, qualifying that by suggesting it will be "a little lower than expected"
"We expect rates to be on hold in February. Developments that would be necessary to change our minds would be around the labour market; commodity prices; GDP growth; and confidence", says Westpac in a research note.
