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Australia maintains key rate at 1.5%

The Reserve Bank of Australia maintained its cash rate at 1.5% for the 16th consecutive month. Governor Philip Lowe in a Dec. 5 statement said that keeping the monetary policy unchanged would be "consistent with sustainable growth in the economy and achieving the inflation target over time."

He added that "the outlook for non-mining business investment has improved further, with the forward-looking indicators being more positive than they have been for some time."

But a continuing source of uncertainty, he said, is the outlook for household consumption. "Household incomes are growing slowly and debt levels are high," said Lowe.

He said GDP growth is forecast to average about 3% over the next few years, following an expansion pace that has hovered around its trend rate over the year to the third quarter.

The central bank expects inflation, which has remained below 2%, to "pick up gradually" as the economy improves. The Australian dollar has kept within range over the past two years, but Lowe said an appreciation would result in a slower pick up in economic activity and inflation than current forecasts.