Australia's central bank held rates steady at its first policy meeting of the year on Tuesday, playing down a recent soft patch in economic growth as a temporary hiccup that would not prevent a pick up to a healthy 3-percent pace over time. The Reserve Bank of Australia's (RBA) optimistic tone lifted the local currency 20 ticks to $0.7662 as markets widened the odds on another policy easing.
The central bank kept rates at a record low of 1.5 percent for a seventh straight month, following easings in August and May last year. All 72 economists in a Reuters poll expected a steady outcome this week.
Notably, Governor Philip Lowe said the economy looked to have bounced back to "reasonable growth" after a surprise contraction in the third quarter of last year.
"The Bank's central scenario remains for economic growth to be around 3 percent over the next couple of years," Lowe said, waving aside fears Australia may have slipped into its first recession in 25 years.
He also reiterated the bank's forecasts for a gradual pick up in underlying inflation, which is currently pinned at a record low of 1.5 percent.