Reserve Bank of Australia to hold rates
The Reserve Bank of Australia (RBA) has hinted of leaving the interest rate at its present level until June on the back of the continuing debt crisis in Greece and the weakening euro.
According to the central bank, the Greek debt contagion is weighing against any decision to raise the rate to 4.50 percent.
In a statement, the RBA said its board spent "considerable time" debating the lingering debt and fiscal crisis in Europe during its May 4 meeting and discussed its implications into the local economy.
In the same meeting, the board decided to lift the official cash rate by 25 percentage points.
The board's minutes published on Tuesday said: "The measures of financial support for Greece so far announced had not managed to calm markets, There was a risk that the situation could worsen further, damaging the global economic recovery."
The bank added it has also considered the timeframe with which any market reactions into the Greece bailout could be felt. At this time, everything is uncertain, the bank said and added "it could be some time before the uncertainties were resolved."
The RBA said: "A case could be made for a pause in the process of normalising interest rates owing to the uncertainty in the euro area but it ultimately judged that any direct impact on Australia would be small."
The RBA said it decided to be prudent to undertake a new round of monetary tightening amidst fears lenders would pass on the hike to consumers.