RBA keeps interest rates unchanged, Aussie strengthens

Australia's central bank kept a steady hand on the tiller when it met to decide on interest rates on Tuesday, arguing that the outlook for the economy had firmed a little.

Nevertheless, it left the door open to looser policy should inflation turn out to be on a course to undershoot its target.

The Reserve Bank of Australia's cash rate was thus kept at 2%, as had been anticipated by most economists.

As of 08:57 BST the Aussie was 0.76% higher to 0.7201 versus the US dollar.

In his policy statement, Governor Glenn Stevens described global economic growth as "moderate" and linked the "much lower" commodity prices versus a year ago in part to increased supply.

"While credit costs for some emerging market countries remain higher than a year ago, global financial conditions overall remain very accommodative," Stevens added.

Business surveys had been pointing to a gradual improvement in the economy over the past year with inflation "consistent" with the target over the next one to two years, albeit "a little lower than earlier expected", he said.