The Reserve Bank of Australia left its official cash rate unchanged at 4.75% yesterday, the first in a series this week of central banks expected to keep their rates on hold.
RBA governor Glenn Stevens said on the central bank's website that since the previous board meeting, concerns about the creditworthiness of some European governments had again become the main focus of financial markets.
A marked rise in sovereign bond spreads had followed for some eurozone countries, along with an increase in volatility.
At the same time, recent data suggested the Chinese and Indian economies had continued to grow strongly and price pressures, particularly for food, had picked up in China and other Asian economies.
In Australia, the terms of trade were at their highest level since the early 1950s and national income was growing strongly as a result.
Employment growth had been strong over the past year and the exchange rate had risen significantly this year, he said.
"Over the next few quarters, inflation is expected to be little changed, though it is likely to increase somewhat over the medium term if the economy grows as expected," Mr Stevens said.
AT A GLANCE
• RBA decision yesterday - remained at 4.75%.
• RBNZ tomorrow - expected to remain at 3%
• Bank of England Friday - expected to remain at 0.5%
