Dollar still 'uncomfortably high'
However, it warned the exchange rate was "still uncomfortably high".
The RBA was hopeful growth in the non-mining sectors was improving in the low interest-rate environment. Analysts said the central bank could be reaching the end of its monetary-easing cycle.
The Australian dollar slipped more than a quarter of a cent after the statement on Tuesday, falling to US94.68¢ from US95¢.
RBA governor Glenn Stevens said in the medium term, "private demand outside the mining sector is expected to increase at a faster pace", although the outlook was still uncertain.
He added that housing and equity markets had strengthened and would eventually be supportive of investment.
Mr Stevens continued to highlight the need for a lower exchange rate in what Westpac chief economist Bill Evans said appeared to be a tactical move to ease pressure on the dollar.
"The Australian dollar, while below its level earlier in the year, is still uncomfortably high," Mr Stevens said. "A lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy."
The RBA has increased its comments about the strength of the dollar in recent weeks. The currency has risen from a year's low of just below US90¢ in late August.
Last week, Mr Stevens said the dollar was not supported by the costs and productivity in the economy, adding that the terms of trade were also more likely to fall than rise.
While the RBA statement was light on guidance, analysts said Friday's Statement of Monetary Policy and the minutes of the meeting could provide a better gauge on what the Reserve would be keeping an eye on in the next few months. The SOMP is also expected to give updated growth and inflation forecasts.
"The communications strategy now in place involves leaving the door open to further rate cuts but making it clear that the preference is for any further easing in monetary conditions come via a lower Australian dollar," CBA chief economist Michael Blythe said.
The bank has been reducing the cash rate since November 2011 in an effort to stimulate the economy as mining investment peaks.
Expectations for the first interest rate cut since August had been low, and fell further after figures released on Monday pointed to stronger-than-expected retail spending in September and a continued rise in house prices.
New home building approvals are up by a stronger-than-expected 14.4 per cent in September.
Economists are also turning their attention to the release of the October jobless numbers on Thursday. The jobless rate was 5.8 per cent in August.
Frequently Asked Questions about this Article…
The Reserve Bank of Australia (RBA) has expressed concerns that the Australian dollar remains 'uncomfortably high' despite being below its level earlier in the year. A lower exchange rate is deemed necessary to achieve balanced economic growth.
The Reserve Bank of Australia (RBA) has expressed concerns that the Australian dollar remains 'uncomfortably high' despite being lower than earlier in the year. A high exchange rate can hinder balanced economic growth, and the RBA suggests that a lower dollar would be beneficial for the economy.
A high Australian dollar can put pressure on the economy by making exports more expensive and less competitive internationally. This can hinder growth in non-mining sectors and affect overall economic balance.
A high Australian dollar can make exports more expensive and less competitive internationally, potentially slowing down economic growth. The RBA believes that a lower exchange rate is necessary to achieve balanced growth across different sectors of the economy.
The RBA is maintaining a cautious approach, keeping the cash rate on hold while expressing a preference for easing monetary conditions through a lower Australian dollar rather than further rate cuts.
The RBA has kept the cash rate on hold, indicating cautious optimism about the economy. However, it continues to emphasize the need for a lower exchange rate to support economic growth, suggesting that further monetary easing could come from a weaker Australian dollar.
The RBA is optimistic about growth in non-mining sectors, expecting private demand outside the mining sector to increase at a faster pace. Housing and equity markets are also strengthening, which could support investment.
The RBA is hopeful that growth in non-mining sectors will improve in the current low interest-rate environment. Private demand outside the mining sector is expected to increase at a faster pace, contributing to overall economic growth.
Recent figures indicate stronger-than-expected retail spending and a continued rise in house prices. Additionally, new home building approvals have increased by 14.4% in September, suggesting a positive economic outlook.
Recent figures showing stronger-than-expected retail spending and a continued rise in house prices have influenced the RBA's decision to keep interest rates on hold. Additionally, new home building approvals have increased significantly, indicating positive economic activity.
The RBA has kept the cash rate on hold, with expectations for further rate cuts being low. The bank has been reducing the cash rate since November 2011 to stimulate the economy as mining investment peaks.
While the RBA has left the door open for further rate cuts, the preference is for any easing in monetary conditions to come from a lower Australian dollar. Analysts suggest that upcoming statements and meeting minutes may provide more guidance on future rate changes.
Future economic policies could be influenced by the release of the October jobless numbers and the Statement of Monetary Policy, which will provide updated growth and inflation forecasts. These data points will help gauge the RBA's focus in the coming months.
The Australian dollar has slipped slightly, falling to US94.68¢ from US95¢ after the RBA's statement. Despite this, the currency remains higher than its year's low of just below US90¢ in late August.
The exchange rate plays a crucial role in the RBA's monetary policy. The bank prefers to ease monetary conditions through a lower Australian dollar, which can help achieve balanced economic growth without further rate cuts.
Economists are closely watching the release of the October jobless numbers, as well as upcoming statements from the RBA, which are expected to provide updated growth and inflation forecasts. These indicators will help gauge the economic outlook and potential policy adjustments.
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