SYDNEY, April 6 (Xinhua) -- Australia's central bank decided to maintain the interest rates unchanged at the historic low of 0.10 percent despite a booming property price.
"The Board decided to maintain the current policy settings, including the targets of 10 basis points for the cash rate and the yield on the three-year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program," Reserve Bank of Australia (RBA) governor Philip Lowe said in a statement on Tuesday.
Lowe said the economic recovery in Australia is well under way and is stronger than had been expected, but the economy is operating with considerable spare capacity and unemployment is still too high. It will take some time to reduce this spare capacity and for the labor market to be tight enough to generate wage increases that are consistent with achieving the inflation target.
Therefore, the RBA will keep a highly supportive monetary conditions, and will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range.
Lowe acknowledged housing markets have strengthened further under current monetary conditions, with prices rising in most markets.
"Given the environment of rising housing prices and low interest rates, the RBA will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained," Lowe said.
According to CoreLogic, a leading provider of property data, the national home value index recorded a 2.8 percent rise in March, the fastest rate of appreciation since October 1988.
At the same time, Lowe said the initial 100 billion Australian dollars (about 76.14 billion U.S. dollars) government bond purchase program was almost complete and the second 100 billion Australian dollars (about 76.14 billion U.S. dollars) program will commence next week. Beyond this, the RBA is prepared to undertake further bond purchases if doing so would assist with progress towards the goals of full employment and inflation.