Rates and races are the main headlines in Australia Tuesday.
The Reserve Bank of Australia, the central bank of the country, decided to leave the official cash rate on hold at a low of 2 per cent, pointing to an improvement in the economy over the last few months as the reason for postponing the increase at this time. The RSB left opened the door for a possible rate cut in the near future. The rate has remained where it is since May but the board said a soft inflation outlook may leave room for a further rate cut if needed.
According to Reserve Bank governor Glenn Stevens, "At today's meeting the board judged that the prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting."
The Australian dollar had been volatile ahead of the rates call but afterward was steady at $0.7170 after the announcement.
Focus on Horses
Aussie’s were more focused on foreign thoroughbreds than domestic interbank markets Tuesday as the Melbourne Cup kicked off in Flemington a half hour after the rate decision was announced at 2:30pm local time.
More than a quarter of a million Australian dollars was gambled on the game. But the economic impact is more than just betting on a winner. The 2014 race added AUD 700 million to the Australian economy and AUD, 27million was spent by over 107,000 tourists on accommodations and at the carnival itself. This year’s race should come in with similar if not better numbers.